United States

Analyst Research Report Snapshot


ITC Ltd.- Q4FY14 Result Update - "ACCUMULATE"




Kisan Ratilal Choksey Shares and Securities Private Limited


30 May 2014





Companies referenced:


Available for Immediate Download

ITC Ltd.- Q4FY14 Result Update CMP: Rs 343 Target Price: Rs 386 Recommendation: ACCUMULATE “Surprise in FMCG portfolio!!!!!” FMCG major ITC reported better numbers with Net sales up by 12% y-o-y to Rs.9145 crores, on the back of better performance of Agri and FMCG other business, which reported a growth of 13.5% and 11% respectively. Cigarette portfolio the major business reported flat growth. EBITDA was up by 18% y-o-y to Rs.3203 crores. Operating margins improved by 195bps on y-o-y to 35%, on account of decreased raw material cost than last year and FNCG segment posting positive results. Net profit increased by 18% y-o-y to Rs.2278 crores on the back of better operating efficiency. Cigarette business supports growth: ITC’s Cigarette-business the major business segment saw a subdued quarter with its revenue flat on y-o-y basis to Rs.4079crs on the back of lower volume sales however; it grew by 12% q-o-q on the back of price hike taken for some of its brand in this quarter. The contribution of 64mm cigarette increased giving revenue stability in its core business. In Non-cigarette businesses FMCG segment reported good set of numbers both y-o-y and q-o-q basis giving boost to revenue growth. Hotel and Paperboard segment were subdued; Agri business fared well than last quarter. Margins declined on Q-o-Q basis: EBITDA grew by 18.5% y-o-y to Rs.3203crs on the back of better performance of FMCG segment and price hike done for some of the Cigarette brands. Margin improved by 195bps on y-o-y basis to 35% on the back of decreased raw material cost than last year. Sequentially EBITDA decreased marginally by 2.5% and is under pressure due to declining volumes in its core cigarette business and increasing ad spends. However, FMCG segment surprised with profit of Rs.43crs increased by 3 times from the previous quarter. The Hotel business reported growth in profit up by 23% on q-o-q and by 11.5% on y-o-y basis because of its Chennai property doing well. Net Profit increased on Y-o-Y basis: Net profit was up by 18% y-o-y to Rs.2278crs on the back of better operating profit and reduced interest burden. PAT margin was improved by 134bps y-o-y to 24.9%. On sequential basis it was down by 275bps due to increased cost resulting into poor operating results. Valuations & Views: We expect ITC to post its normal revenue growth rate of 28% to 30% in FY15 & FY16 driven by superior product mix & leadership position in the core business and continued investments behind brands & distribution network. At the CMP of Rs.343 per share ITC is available at a PE of 29.9xFY15E & 24.9xFY16E. We recommend Accumulate rating on the stock, with a target price of Rs.386, a potential upside of 13%.

Why buy analyst research?

  • Institutional quality research
  • Available for Immediate Download
  • Detailed company or industry insight
  • Print or save
  • 24 hour customer support
Return to previous page without adding this item to your cart.
Email Customer Support.

About Analyst Research

Analyst research reports are available for immediate download after purchase. You will have unlimited access to the report for 24 hours after purchase, to download, print or save it as many times as you wish. Analyst Research provided by Reuters does not constitute investment advice, and is not endorsed by Reuters Research. This information is protected by copyright and intellectual property laws. More information on Analyst Research.