ITC Ltd. share price target

Diversified group ITC Ltd.'s quarterly profit meets estimates. The Company delivered a healthy performance during the quarter amidst subdued demand conditions and continuing pressure on the legal cigarette industry. On a comparable basis, Gross Sales Value (net of rebates/discounts) for the quarter stood at Rs 18171.66 crores,...

Reiterate BUY. Our TP is Rs 367, at 32x Jun-20E EPS. ITCs net revenues grew by 13.5% (exp of 8.2%) beating estimates for all segments except Paper business. Cigarette value growth was at ~9% (exp. 8%) with volume growth of ~1% (exp. flat). EBITDA/ APAT grew by 7/10% vs. exp. of 12/10%.

ICICI Securities Ltd | Retail Equity Research ITC reported net revenue growth (net of excise duty for the base and current quarter) of 7.6% YoY to | 10,707 crore. Gross numbers for the cigarette segment are not comparable. FMCG, agri business & hotels business witnessed growth of 10.3%, 11.9% and 14.2%, respectively. However, the paperboard segment reported flat sales during the quarter. Cigarette volume increased ~2% after three consecutive quarter of volume de-growth...

ITC's EBITDA/ PAT growth was reasonably healthy at +19.2%/+18.2% YoY, well ahead of our and consensus estimates with significant improvement in performance in cigarettes/ other segments in the aggregate. Strong performance was exhibited by Cigarettes, Agri-business and Paper board. Despite strong performance, ITC is trading at a steep discount to other large FMCG players, which trades at 35x-45X FY20E PER (vs. 25X FY20E PER for ITC)....

Legal cigarette industry reeling under pressure The legitimate cigarette industry in India declined steadily since 2010-11 at a CAGR of 4.8% p.a., however, illegal cigarette volumes have grown at about 5% p.a. during the same period, making India the 4th largest illegal cigarette market in the world. This results in ` 130bn revenue loss to the government each year. While legal cigarettes in India contribute 87% of tax revenue, it constitutes only 11% of tobacco consumption. India is studying the Kenyan model of tracking tobacco products to curb illicit trade that leads to loss of tax revenue. The mechanism...

Legal cigarette industry reeling under pressure The legitimate cigarette industry in India declined steadily since 2010-11 at a CAGR of 4.8% p.a., however, illegal cigarette volumes have grown at about 5% p.a. during the same period, making India the 4th largest illegal cigarette market in the world. This results in ` 130bn revenue loss to the government each year. While legal cigarettes in India contribute 87% of tax revenue, it constitutes only 11% of tobacco consumption. India is studying the Kenyan model of tracking tobacco products to curb illicit trade that leads to loss of tax revenue. The mechanism...

FY18 AR: Government remained the bigger beneficiary The GST Council's (perhaps unintentional?) u-turn on cigarette taxation immediately post GST rollout ensured that government retained a lion's share of ITC's value-addition. Over the past 5 years, 73% of the total value-added by ITC accrued to the government (value-added' defined as the value created by the economic activities of the company and its employees). ITC contributed a cumulative INR 1.5tn (USD 23bn) to the Exchequer over the past 5 years (FY14-18) during which period its own profits were just INR477bn (USD 7.3bn) - share of the government in the value-added by ITC is 3.5x the amount that accrued to the providers of...

Revenue grew by 8.34% to Rs. 10479.24 Cr in Q4FY18 when compared to the previous quarter. ITC Ltd Q4FY18 Result Comment

Reiterate BUY. Our TP is Rs 358, at 32x Mar-20E EPS. ITCs gross revenue grew by 3.6% vs. our expectation of 6.5%. Cigarette value growth was ~6% with volume contraction of ~3% (inline). EBITDA/ APAT grew by 7/10% vs. expectation of 10/10%. Despite steep rise in taxes, ITC has improved cigarette performance consistently. Sequentially volume decline is abating and we expect positive volume growth in FY19. EBIT growth at 8% is encouraging (margin expansion) despite downtrading.

ICICI Securities Ltd | Retail Equity Research ITC posted decline in net revenue (net of excise duty for base quarter and in current quarter) by 4.8% YoY to | 10,586.7 crore. Cigarette segment revenue numbers are not comparable. However, FMCG & hotels business saw growth of 5.8% & 5.6%, respectively. Agri business & paperboard segment saw de-growth of 5.7% and 5.2%, respectively. Cigarette volume declined ~2% after the steep price hike taken by company to pass on the GST increase in July 2017...