MOSL: ITC (Neutral)-Cig volumes marginally exceed estimate, margins surprise positively
ITC: Cig volumes marginally exceed estimate, margins surprise positively
(ITC IN, Mkt Cap USD51.1b, CMP INR287, TP INR295, 3% Upside, Neutral)
- ITC’s net revenue grew 7.6% YoY (est. of +14%) to INR107.1b (est. of INR113.5b), EBITDA increased 12.2% YoY to INR42.0b (est. of INR42.1b) and adj. PAT rose 10.1% YoY to INR28.2b (est. of INR29.1b).
- EBITDA margin expanded 160bp YoY to 39.2% (est. of 37.1%). Other income of INR4b came in lower than our estimate. Consequently, PAT growth trailed EBITDA growth.
- volumes are likely to have increased at ~1% (est. of flat growth). Calculated Cig. net sales grew 2.3% YoY. According to the new reporting, ITC has disclosed net segmental sales for 1QFY19 and gross segmental sales for the base quarter. Our numbers for base quarter net sales are calculated. Calculated Cig. EBIT grew 8.7% YoY (est. of +10%), while calculated Cig. EBIT margin expanded 410bp YoY to 69.4%.
- Other FMCG net sales were up 10.7% YoY to INR28.7b, with EBIT of INR501m v/s INR54m in the base quarter.
- Agri, Paper and Hotel revenue grew 14.2%, 5.7% and 11.9%, respectively. EBIT margin in the Paper business expanded 180bp YoY, while that in Agri business contracted 230bp.
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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