MOSL: ITC (Neutral)-Immediate recovery in Cig volumes appears uncertain
ITC: Immediate recovery in Cig volumes appears uncertain
(ITC IN, Mkt Cap USD50.9b, CMP INR274, TP INR278, 2% Upside, Neutral)
- ITC’s 3QFY18 net revenue grew 7.6% YoY to INR99.5b (est. of INR96.2b). EBITDA rose 10.1% YoY to INR39b (est. of INR37.8b), while adj. PAT increased 6.5% YoY to INR28.2b (est. of INR28.3b). Cigarette volume decline is likely to have been ~2%. Calculated cigarette revenue grew ~14% YoY, while cigarette EBIT increased ~8% (~410bp contraction in margin). There has been no price increase over the last 3-4 months, unlike the previous years, when ITC used to increase prices ahead of the budget.
- ‘FMCG – Others’ sales were up 12.2% YoY (est. of +11%) to INR 28.7b, with EBIT profit of INR470m v/s INR197m loss in 3QFY17, led by enhanced scale, mix and cost efficiencies. Accompanying result press release also stated that a) comparable sales growth for ‘FMCG – Others’ was ~16% and b) it gained market share in major FMCG categories, particularly in atta, potato chips, premium cream biscuits, noodles and deodorants.
- Agri, Paper and Hotels revenue grew -8.4%, 13.4% and 9.2%, respectively. Margin in the Paper business shrunk 80bp YoY to 21%, while Agri business witnessed 110bp EBIT margin expansion to 15.2%.
ITC is a diversified manufacturing and marketing company which is based in India. Co. maintains an operating presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While Co. is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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