ITC Ltd. share price target

Comparable cigarette gross sales and EBIT grew 1% and 2% with 6% volume decline. Cigarette volume was hurt due to GST rate pass-through. Other FMCG and paper sales grew 10% and 18%, while agri and hotels posted muted show.

We have BUY rating with a TP of Rs 358, based on 32x Sep-19EPS. ITC net revenues were up 1% YoY at Rs 97.6bn. Like-to-like revenue grew 4% vs. 6% expectation. EBITDA and PAT grew 4% and 6% respectively. Amidst a rise in taxes, cigarette revenue growth was at ~2%, impacted by ~6% volume contraction (5% fall anticipated). The hike in Cigarette prices was ~11%, but an unfavourable product mix (higher share of <65mm Cigarettes) impacted Cigarette revenue growth. Volume pressure was softer in September, and could result in better volume traction in the coming quarters. FMCG at 10% revenue growth (like-to-like) and Paper at 18% EBIT growth were outliers in the Non-cigarette segment. Cigarette business, despite punitive taxes, registered ~10% and ~9% revenue CAGR in the last 10 and 5 years resp. We expect ITC to deliver ~7% CAGR in the Cigarette business over FY17-20E. Non-cigarette business can improve gradually, as most of their demand drivers are in a recovery stage. We expect ~13% sales CAGR over FY17-20E. ITC is a market leader in Cigarettes (~70% market share), notebooks, valued-added paperboards and a critical player in biscuits. The company operates at EBITDA margin of 36%, along with core RoCE of ~40%. We have BUY rating with a TP of Rs 358, based on 32x Sep-19EPS.

ICICI Securities Ltd | Retail Equity Research ITC reported net revenue growth (net of excise duty for base quarter as well as our estimates) of 7.2% YoY to | 10226.4 crore, marginally lower than our estimate of | 10593.8 crore. Amid higher tax incidence under GST, the cigarette business was adversely impacted and reported a volume decline of ~6% YoY, against our estimated decline of ~3% YoY (assuming realisation growth of ~12% YoY to pass on the increase in the tax incidence under GST)...

Cigarette sales volume declined by 5-6%; Noncigarette FMCG outperforms: Revenue of the cigarette business grew by 1-2% on comparable basis, as cigarette sales volume declined by 5-6% on account of a substantial increase in tax rate under the GST regime. PBIT grew by 2.3% YoY on account of price hikes undertaken prior/ post GST implementation. Non-cigarette FMCG delivered a strong performance in the tough...

ITC's 2QFY18 net revenue grew 1.1% YoY (est. of +2.5%) to INR97.6b. EBITDA margin expanded 90bp YoY (est. of +160bp). EBITDA thus grew 3.6% YoY to INR37.6b (est. of +6.6%). Adj. PAT grew 5.6% YoY (est. of +9.5%) to INR26.4b. Cigarette volume is likely to have declined ~6% YoY, higher than our expectation of a 2% fall. We reckon the proportion of sub-65mm cigarette sales to have increased further. For cigarette, revenue declined 2.3% YoY, while EBIT grew 2.3% YoY (320bp expansion of EBIT margin on gross sales). Cigarette EBIT growth was the second weakest in 10 quarters, following a 1.7% increase...

According to media reports, the Health ministry has issued a directive that shops authorized to sell tobacco products will not be permitted to sell any non-tobacco products that are essentially meant for non-tobacco users, especially children.

In-line Q1: Gross sales, EBITDA, and adj. PAT grew 4%, 6%, and 7%. Cigarette gross sales and EBIT grew 7% and 9% with 2% volume growth (vs. street estimate of flat to -2%). Other FMCG and hotel sales grew 9% and 6%, while agri and paper sales growth at -1% and 3% disappointed.

Revenue fell by 10.21% to Rs. 9876.45 Cr in Q1FY18 when compared Revenue fell by 10.21% to Rs. 9876.45 Cr in Q1FY18 when compared

ITC commands high operating margin of 36%, along with core RoCE of ~40%. We have BUY rating with a TP of Rs 353, based on 32x Jun-19EPS. ITCs gross revenue was up 4.3% YoY at Rs 137bn (our expectation 3.4%). EBITDA/PAT grew 6.2%/7.4% YoY respectively, in-line with our expectations. Revenue growth was healthy, considering destocking pressure. Cigarette business registered healthy revenue/EBIT growth of 6.6%/9.0% respectively (5%/6.4% expectation). We believe cigarette volumes grew by ~1%. Non-cigarette business remained slow, with revenue/EBIT growth of 3.5%/4.5% respectively