Ventura has recommended hold rating on ITC, in its January 21, 2013 research report.
Ventura has recommended hold rating on ITC , in its January 21, 2013 research report.
“ITC, strong set of numbers for the cigarette business (1.5% volume growth and 400 bps margin improvement) helped ITC continue to post a healthy growth. Further with the FMCG business on the anvil of a turnaround the going could never have been better. At the CMP of Rs 291, ITC trades at a PE multiple of 30.1x and 25.3x FY13 & FY14 consensus earnings estimates. As per our blended multiples valuation methodology ITC is quoting at high valuations and we maintain a HOLD on the stock.”
“ITC recorded a robust top-line growth of 23.1% YoY in Q3FY13 to Rs 7627.1 crore driven primarily by branded packaged foods (11%), agri business (15%) and the cigarette business (57%).PAT, at Rs 2052 crore, grew by 20.6% YoY owing to a steep hike in cigarette prices and significant growth in the non-cigarette FMCG segment. EBITDA margin declined marginally by 80bps YoY and 10bps QoQ to 37.1%. The mainstay cigarettes business, which accounts for ~47% of ITC’s overall revenues, posted 13.1% YoY rise in revenues to Rs 3657.4 crore. ITC’s newly launched cigarette (<65 mm filter category in UP and Bihar) like Navy Cut, Gold Flake has received a favorable response from the customers and ITC plan it to roll out it nationally. Segment EBIT margin expanded by 400 bps YoY and grew at a healthy rate of 21.1% during the quarter. FMCG business comprising branded packaged foods, garments, personal care products, educational & stationary products, matches and agarbattis continued to witness healthy traction with sales growing by 30% YoY to Rs 1783 crore. All major FMCG categories recorded significant growth. Hotel business continued to show sluggish performance on account of slowdown in domestic economy, adverse economic environment in US and Europe markets and significant additions to room supplies. Revenues from hotel business grew marginally by 11% YoY to Rs 310 crore. EBIT rose to 263% on a QoQ basis to Rs 56 crore.”
“Paper business recorded healthy growth of 8.5% YoY in sales to Rs 1062 crore aided by improved realizations and product mix. EBIT, however, grew by 1.9% YoY to Rs 229 crore; however the EBIT margins were down by 140 bps YoY to 1.9%. Agri business recorded a robust 43% YoY growth to Rs1631 crore aided by the higher export of wheat, leaf tobacco and soya. Increased operations at the recently commissioned green leaf tobacco threshing plant at Mysore supported the growth. EBIT witnessed a growth of 21.9% to Rs173 crore and EBIT margin decreased by 220 bps QoQ to 10.6%,” says Ventura research report.
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