ITC's Q4FY16 standalone net profit declines 6% yoy to Rs.2,495.20 crore : More or less in line with estimates

The company’s standalone revenue stood at Rs. 10,168.73 crore, up 9.43% yoy and 10.81% qoq.

May 20, 2016 3:13 IST | India Infoline News Service
ITC , a diversified company and leader in Tobacco industry, reported standalone net profit of Rs.2,495.20 crore for the quarter ended March 31, 2016, registering growth of 5.68% yoy, but decline of 5.94% qoq. The company’s revenue stood at Rs. 10,168.73 crore, up 9.43% yoy and 10.81% qoq.

Its standalone core operating profit of Rs. 3,687.08 crore for the quarter, clocked growth of 13.69% yoy and 2.27% qoq. Operating profit margin for the current quarter at 36.26% expanded by 136 bps yoy but contracted by 303 bps qoq.

For the year ended March 31, 2016, the company reported standalone net profit of Rs. 9,844.71 crore, growing by 2.47% yoy. Its standalone revenue for the period stood at Rs. 36,837.39 crore, registering growth of 0.9% yoy.

ITC's core operating profit stood at Rs. 14,238.23 crore, recording growth of 5.68% yoy. Operating margin for the current period at 38.13% expanded by 122 bps yoy.

ITC - Q4FY16  - Cigarette volume uptick; margin expands:

ITC’s net sales increased 9.4% to Rs. 10,169 crore, 3.5% lower than IIFL estimate. The cigarette business which forms ~50% of the total revenue reported a growth of 10.2%, indicating an uptick in cigarette volume. In addition, Agri Business/Other FMCG/Hotels/Paperboard reported a growth of 26.5%/5.4%/4.8%/3%, respectively.

During the quarter, the EBIT margin in the cigarette business improved by 79bps to 65.1%. The surprise element is the EBIT growth of 11.5% where the company was reporting low single digit of EBIT growth in the past few quarters. The Other FMCG business reported an EBIT margin expansion of 73bps to 2.6%. However, the Paperboard/Agri business segment reported a decline in EBIT margin by 39bps/186bps, respectively during the quarter.

The Hotel business reported an increase in EBIT margin by 54.4bps to 16.4%.  EBITDA grew by just 13.7% to Rs. 3,687 crore, 2%/3.8% higher than IIFL estimate of Rs. 3,615 crore. With higher tax rate of 34.9% in Q4FY16 as against 29.5% in Q4FY15, PAT grew by 5.7% to Rs. 2,495cr, 6.4%.

Result Highlights: (Rs. in crore)

Reported Results IIFL Estimates Variance (%)
Standalone Revenue 10168.73 10540.14 [3.52]
Standalone Net Profit 2495.20 2613.29 [4.52]

Bloomberg estimated the company’s consolidated net profit at Rs. 2,400 crore.

Corporate Action: ITC's board at its meeting held on May 20, 2016, inter alia, has recommended dividend of Rs. 8.50 (including Special dividend of Rs. 2.00) per Ordinary Share of Rs. 1/- each for the financial year ended March 31, 2016, subject to declaration of the same by the Members at the 105th Annual General Meeting of the Company convened for July 22, 2016; the dividend, if declared, will be paid on July 25, 2016 to those Members entitled thereto.

Stock Commentary:

ITC Ltd is currently trading at Rs. 325.8, up by 0.9 points or 0.28% from its previous closing of Rs. 324.9 on the BSE.

The scrip opened at Rs. 326.8 and has touched a high and low of Rs. 331.5 and Rs. 325.65 respectively. So far 6957259(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 261453.76 crore.

The BSE group 'A' stock of face value Rs. 1 has touched a 52 week high of Rs. 359.75 on 26-Oct-2015 and a 52 week low of Rs. 268 on 29-Feb-2016. Last one week high and low of the scrip stood at Rs. 334.2 and Rs. 315.3 respectively.

The promoters holding in the company stood at 0 % while Institutions and Non-Institutions held 55.62 % and 44.16 % respectively.

The stock is currently trading below its 50 DMA.

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