Equity Research Summary-ITC
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Transcript of Equity Research Summary-ITC
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8/2/2019 Equity Research Summary-ITC
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4/11/12
Equity Research Summary
ITC Ltd.Submitted By:Kapil GoyalIM-17, Roll No. 75
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Recommendations
For 4QFY2011, ITC declared steady
growth in its top line and earnings.We havemarginally revised our estimatesdownward. We recommend Neutralon thestock.
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egmen s excep gr -business show double digit
growth
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arn ngs grow y s rong25% yoy aided by high
other income
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gare e segmenregistered double-digit sales
and EBIT growth We believe the cigarette business ispoised for double-digit growth interms of revenue and EBIT in
FY2012E, albeit on a highbase. Wehave modeled in growth of 45% incigarette volumes for FY201213E.
Price hikes and no further increase inexcise duty by Govt.
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on-c gare ewitnessing strong revenue
traction ITCs non-cigarette FMCG businessregistered steady revenue growth of16.8% yoy
However, losses reduced by ~`11cr
During the quarter, the company
launched Sunfeast Yipee noodles in two
flavours.
Going ahead, we expect revenue
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Hotel business showsrecovery as ARR improves
ITCs hotel business registered robustgrowth of 18.2% yoy to `324cr(`274cr) during the quarter, aided by
the festive/holiday season. The business segment reported EBIT
margin of 30.7% (expansion of 219bp
yoy), driving strong 27.3% yoygrowth in EBIT.
We believe the hotel business is well
on track to post a 21% CAGR in
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Paperboard and packagingsegment shows resilience
The paperboard and packagingsegment registered strong revenuegrowth of 15% yoy (14.2% on a net
level) to `962cr (`836cr). However, EBIT margin of the
segment registered a marginal
contraction of 5bp yoy to 20.1%. Going forward, we expect the
segment to post a modest 15% CAGR
in revenue during FY201113E,
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gr us ness reg s ersanother quarter of muted
revenue growth ITCs agri business registered 9.5%yoy growth in revenue (on high base)to `1,082cr (`988cr). The business
segment reported a 217bp yoyexpansion in EBIT margin to 9.2%,aiding 43.1% yoy growth in EBIT.
Going ahead, we expect thissegment to register a 4% CAGR inrevenue over FY201113E (on
account of flat global cigarette
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Model double-digit sales andEBIT growth in cigarettes
We have modeled in volume growthof 45% in cigarette volumes forFY201213, despite high base of
FY2011 on account of high pricehikes (1520% weighted averageprice hikes taken) likely to fully offset
1) ~17% excise hike in UnionBudget 201112 and 2) rise in VATannounced in several states.
We believe the cigarette business is-
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Non-cigarette to register a23% CAGR over FY201113E While cigarettes remain the main
profit centre for the company,investments in non-cigarette
businesses such as FMCG, hotels andpaperboards have started yieldingpositive results.
During FY201113E, we expect non-cigarette EBIT to grow at a 23%CAGR aided by 1) reduction in non-
cigarette FMCG losses (likely
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Financial Statements
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Thank You