ITC's PAT is robust; our target price is Rs 241: Elara Cap

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ITC's PAT is robust; our target price is Rs 241: Elara Cap

ITC announced its third quarters numbers. In an interview to CNBC-TV18, Himani Singh, Elara Capital says, the results are very robust on the bottom-line. “I think the stock should react positively,” he adds.

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ITC announced its third quarters numbers . The company posted a net profit of Rs 1,701 crore for the quarter ended December 31, 2011, up 22.46% as compared to Rs 1,389 crore for the quarter ended December 31, 2010.

In an interview to CNBC-TV18, Himani Singh, Elara Capital says, the results are very robust on the bottom-line. "I think the stock should react positively," he adds.

She has a price target of Rs 241 on the stock.

Below is the edited transcript of her interview with CNBC-TV18's Ekta Batra and Latha Venkatesh . Also watch the accompanying video.

Q: Can you give us your first take on ITC?

A: I would say that the results are very robust on the bottom-line front, although on the top-line the growth has been 14.6%, slightly below the estimates. We were expecting around 17% odd growth.

On the bottom-line, the growth has been very robust. The profits after tax (PAT) margins at around 27% are very heartening. So, all in all, I think it's a very positive one and the stock should react positively.

Q: Do you have a stock price target at this point at this point?

A: We have a stock price target of Rs 241 on it.

Q: Do you think they will be able to maintain this run-rate in the fourth quarter and say early FY13?

A: There would be an overhang on the stock because of the eminent excise duty hikes. We did not have any excise duty in the last budget. Thereby I would say that it would not be surprising of the street to expect an excise hike and also when the fiscal deficit is on a higher end. So, yes, probably continuing with the current trend it might be an issue because the stock will have an overhang of a duty implication.

Q: What about the EBITDA margins?

A: We were expecting gross margins in the range of 62% odd.