MOSL: ITC (Neutral)-Delivers on expectations, but smoky outlook keeps us neutral
ITC: Delivers on expectations, but smoky outlook keeps us neutral
(ITC IN, Mkt Cap USD50.4b, CMP INR290, TP INR305, 5% Upside, Neutral)
- ITC delivered growth of 13.3% YoY in net revenue (INR119.9b v/s our estimate of INR120.3b), 10.3% YoY in EBITDA (INR45.7b v/s our estimate of INR46.9b) and 18.7% YoY in adj. PAT (INR34.8b v/s our estimate of INR32b) in 4QFY19. EBITDA margin shrank 100bp YoY to 38.1% (our estimate: 39%).
- Cig volumes are likely to have grown at ~8% YoY (our estimate: 7% YoY), as against a decline of 2% YoY in the year-ago period, leading to segmental net sales growth of 11.1%. Cig EBIT margin shrank 70bp YoY to 70.3%, leading to EBIT growth of 10% YoY to INR38.6b (our estimate: INR38.8b).
- Other FMCG net sales grew 7.3% YoY to INR32.7b, with EBIT of INR1.3b (4QFY18: INR912m). Agri Business, Paperboards, Paper & Packaging and Hotels revenue grew 16.2%, 18.2% and 24.9% YoY, respectively.
- FY19 performance: Sales, EBITDA and adj. PAT grew 10.8%, 11.4% and 15.3%, respectively. EBITDA margin expanded 20bp YoY to 38.5%.
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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