ITC reported 11.7 percent year on year growth in consolidated net profit at Rs 4,196 crore. On a sequential basis, profit inched up 3.4 percent.
ITC
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ITC share price touched 52-week high of Rs 279.15, rising nearly 5 percent intraday on May 19 a day after the company came out with March quarter earnings.
ITC reported 11.7 percent year on year growth in consolidated net profit at Rs 4,196 crore. On a sequential basis, profit inched up 3.4 percent.
Consolidated revenue for the largest cigarette maker in India rose 15.3 percent on year to Rs 17,754 crore. On a sequential basis, it was down 3.3 percent.
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Here is what brokerages have to say about the stock and the company after earnings:
Prabhudas Lilladher
ITC posted resilient performance with 8.75 percent cigarette volume growth and margin expansion across cigarettes, paperboard and FMCG business. Hotels improved but still remain in the red.
Near term outlook remains positive given, one, positive cigarette volume traction considering stable tax regime, two, strong pricing and benefits of backward integration in paperboard, three, benefits of supply chain disruption in leaf tobacco and strong wheat exports, four, gradually improving occupancy levels in hotels and, five, sustained growth across core segments in FMCG with steady margin expansion.
Although we expect near term margin pressure in FMCG, strong traction in other businesses will enable ITC to sustain double digit profit growth.
We increase the valuation of cigarettes to 16x on improving growth and stable taxation (versus 15x earlier) and assign higher multiples for FMCG and paper business. We increase SOTP (sum of the parts) based target price to Rs 305 (from Rs 285 earlier). Maintain buy.
Sharekhan
Cigarette sales volume are expected to improve in coming quarters. ITC has enhanced focus and redefined growth strategies for all business verticals to improve prospects in the medium to long term.
Strong earnings visibility with improving prospects of core cigarette business, margin expansion in non-cigarette FMCG business and a high cash generation ability with strong dividend payout (dividend yield of 4.3 percent in FY22) will reduce valuation gap in coming years.
We maintain buy on the stock with a revised price target of Rs 320.
Motilal Oswal
ITC’s re-rating would depend on sustained earnings growth going back to high-teens witnessed in the first half of the last decade (18 percent compound annual growth rate) which had slowed to 6.6 percent CAGR over the latter half. Valuation at 17x FY24, although cheap, appears fair.
We value ITC at a 15 percent premium over the global cigarette peer average, aiming for 17x FY24 earnings per share to arrive at our target price of Rs 265. Retain neutral.
Morgan Stanley
We maintain overweight rating on the stock and raise the target price to Rs 293 from Rs 276 as earnings were largely in line with estimates.
The cigarettes and FMCG earnings before interest and tax was ahead of estimates, while hotels and agriculture were weaker.
The strong results and positive near-term earnings augur well for the stock, CNBC-TV18 reported.
Jefferies
We maintain a buy rating on the stock with a target price of Rs 305.
ITC has seen expanding margin, with smart gains in cigarettes and FMCG.
More than 20 percent growth in operating profit is a key positive for FMCG.
The improvement in dividend pay-out drives up return on equity to seven-year high of 25 percent, CNBC-TV18 reported.
At 15:18 hrs ITC was quoting at Rs 275.20, up Rs 8.70, or 3.26 percent on the BSE.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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