ITC (Q3 FY14)

India Infoline News Service | Mumbai |

ITC surpassed our revenue expectations of Rs84bn by recording 13.1% yoy growth at Rs86.2bn during Q3 FY14 driven by strong growth in cigarette and other-FMCG business.

CMP Rs325, Target Rs384, Upside 18.3%

  • ITC’s Q3 FY14 revenues beat our expectations of Rs84bn by recording healthy 13.1% yoy growth at Rs86.2bn

  • Cigarette revenues grew by 12.5% yoy to Rs41.2bn while EBIT margins expanded by 180bps to 34.6%. Cigarette volumes declined by ~2% yoy

  • Other-FMCG revenues grew by 16.6% yoy to Rs20.1bn, registered Rs104mn profit at EBIT level against a loss of Rs240mn in Q3 FY13  

  • OPM expanded by 50bps to 36.9%. Net profit matched our expectations by recording 16.3% yoy growth at ~Rs24bn

  • We expect ITC to witness a revenue/PAT CAGR of 17%/20% respectively over FY13-15. Maintain BUY with a revised 9-mth price target of Rs384 

Result table (Standalone)
(Rs m)
 Q3 FY14
 Q3 FY13
 % yoy
 Q2 FY14
 % qoq
Net sales
 86,231
 76,271
 13.1
 77,758
 10.9
Material costs
 (34,394)
 (30,771)
 11.8
 (29,784)
 15.5
Personnel costs
 (4,008)
 (3,460)
 15.8
 (3,699)
 8.4
Other overheads
 (16,024)
 (14,293)
 12.1
 (13,384)
 19.7
Operating profit
 31,806
 27,746
 14.6
 30,891
 3.0
OPM (%)
 36.9
 36.4
 51 bps
 39.7
 (284) bps
Depreciation
 (2,259)
 (2,052)
 10.1
 (2,209)
 2.3
Interest
 (91)
 (252)
 (63.7)
 327
 (128.0)
Other income
 4,948
 4,129
 19.8
 3,329
 48.6
PBT
 34,403
 29,572
 16.3
 32,338
 6.4
Tax
 (10,550)
 (9,053)
 16.5
 (10,033)
 5.1
Effective tax rate (%)
 (30.7)
 (30.6)
 -
 (31.0)
 -
Reported PAT
 23,853
 20,519
 16.3
 22,305
 6.9
PAT margin (%)
 27.7
 26.9
 76 bps
 28.7
 (102) bps
Ann. EPS (Rs)
 12.0
 10.4
 15.4
 11.3
 6.7
Source: Company, India Infoline Research

Segment-wise net sales and EBIT break-up
Segments
 Q3 FY14
(Rs mn)
 Revenues
 yoy (%)
 EBIT
 yoy (%)
Cigarettes
 41,161
 12.5
 26,526
 18.8
FMCG - Others
 20,778
 16.6
 104
 -
Hotels
 3,154
 1.9
 622
 12.1
Agri Business
 17,864
 9.5
 2,054
 19.
ITC Ltd
BSE 274.55 [2.45] ([0.88]%)
NSE 274.50 [2.85] ([1.03]%)

***Note: This is a NSE Chart

 

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