MOSL: ITC (Neutral)-Cig volumes strong off a low base-rate hike decisions hold key
ITC: Cig volumes strong off a low base; rate hike decisions hold key
(ITC IN, Mkt Cap USD47.7b, CMP INR278, TP INR300, 8% Upside, Neutral)
- ITC's net revenue grew 14.9% YoY to INR112.3b (our estimate: INR106.5b), EBITDA increased 11.2% YoY to INR43.3b (our estimate: INR42.4b) and adj. PAT grew 14.4% YoY to INR32b (our estimate: INR30b).
- Cigarette volumes are likely to have grown at ~7% YoY. Cigarette net sales grew 9.6% YoY. EBIT margin contracted by 50bp YoY, led by higher input cost and higher salience of capsule cigarettes in the sales mix. Consequently, segmental EBIT growth of 8.8% YoY lagged sales growth during the quarter.
- Other FMCG net sales were up 11.5% YoY to INR32b, with EBIT of INR767m v/s INR470m in the year-ago period. Revenue of Agri Business/Paperboards, Paper & Packaging/Hotels grew by 25.7%/20.5%/11.7% YoY.
- Overall EBITDA margin shrank 130bp YoY to 38.5% (our estimate: 39.8%).
- 9MFY19 performance: Sales/EBITDA/adj. PAT grew 9.9%/11.7%/12.2% YoY. EBITDA margin expanded 60bp YoY to 38.6%.
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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