ITC (Q2 FY14)

India Infoline News Service | Mumbai |

ITC reported modest 9% yoy increase in revenues at Rs77.8bn (below our expectations of Rs81.4bn) during Q2 FY14.

CMP Rs340, Target Rs398, Upside 17.0%

  • Revenues miss expectations, record modest ~9% yoy growth at Rs77.8bn mainly due to slower cigarette sales and 12% yoy decline in agri sales

  • Cigarette volumes declined by ~4% yoy on expected lines; EBIT margins expanded by 380bps to 36.2%. Cigarette EBIT for the quarter grew by 23.5% yoy to 25.7bn. It included write back of tax liability due to favourable court order, excluding which cigarette EBIT increased by 16% yoy. Cigarette EBIT margins for the quarter excluding this one off expanded by 155bps to 34%

  • Other-FMCG witnessed a loss of Rs127mn at EBIT level due to increased promotional expenses related to personal care products

  • OPM expanded by 320bps to 39.7% aided by ~180bps drop in raw material and ~210bps decline in overhead cost respectively. Net profit increased by ~21% yoy to Rs22.3bn - above our expectations

  • We expect ITC to witness a revenue/PAT CAGR of 17%/20% respectively over FY13-15. Maintain BUY with a 9-mth price target of Rs398 

Result table (Standalone)
(Rs m)
Q2 FY14
Q2 FY13
% yoy
Q1 FY14
% qoq
Net sales
77,758
71,460
8.8
69,220
12.3
Material costs
(29,784)
(28,644)
4.0
(28,690)
3.8
Personnel costs
(3,699)
(2,891)
28.0
(4,269)
(13.4)
Other overheads
(13,384)
(13,836)
(3.3)
(13,236)
1.1
Operating profit
30,891
26,090
18.4
23,026
34.2
OPM (%)
39.7
36.5
322 bps
33.3
646 bps
Depreciation
(2,209)
(1,889)
16.9
(2,153)
2.6
Interest
327
(233)
(240.3)
(170)
(292.7)
Other income
3,329
2,643
26.0
2,754
20.9
PBT
32,338
26,611
21.5
23,457
37.9
Tax
(10,033)
(8,247)
21.7
(8,709)
15.2
Effective tax rate (%)
(31.0)
(31.0)
-
(37.1)
-
Reported PAT
22,305
18,364
21.5
14,748
51.2
PAT margin (%)
28.7
25.7
299 bps
21.3
738 bps
Ann. EPS (Rs)
11.3
9.4
20.5
BSE 261.70 8.70 (3.44%)
NSE 262.20 8.85 (3.49%)

***Note: This is a NSE Chart

 

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