Angel Broking has maintained neutral rating on ITC , in its January 18, 2013 research report.
“For 3QFY2013, ITC posted a robust 20.6% yoy growth in its net profit to Rs2,052cr, ahead of our estimates. The cigarette division posted a strong 21.1% improvement in its EBIT. The company’s non-cigarette FMCG business reported a substantial decline in its losses to Rs24cr from Rs46cr in 3QFY2012.”
“ITC’s top-line rose by 23.1% on a yoy basis. The cigarette business posted a 13.1% yoy growth in net sales to Rs3,657cr, with the volumes growing by 2-3%. The growth in cigarette volumes was witnessed after four quarters of stagnation due to increase in prices. The other (non-cigarette) FMCG business posted a healthy 30.1% yoy growth in net sales to Rs1,783cr. The agri business continued the strong show with a remarkably good 43.1% yoy growth in net sales to Rs1,631cr, aided by exports of wheat, leaf tobacco and soya. The OPM came in at 36.4%, down 75bp on yoy basis. While the cigarette business posted margin expansion, losses of other FMCG business halved to Rs24cr. However, other divisions posted margin contraction on a yoy basis.”
“We expect ITC to report a top-line and bottom-line CAGR of 17.4% and 18.7% respectively over FY2012-14E, driven by the company’s diversified business model and ability to invest in growing businesses. At the current market price, the stock is trading at 25.9x FY2014E EPS. We maintain our Neutral rating on the stock,” says Angel Broking research report.
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