ITC Q1: Motilal Oswal expects PAT to rise 15% at Rs 1842 cr

Motilal Oswal has come out with its first quarter (April-June) earnings estimates for the consumer goods sector. The brokerage house expects ITC to report a 4.5 percent degrowth quarter-on-quarter (growth of 14.9 percent year-on-year) in net profit at Rs 1841.6 crore.

Revenues are expected to decrease by 6.9 percent Q-o-Q (up 14.5 percent Y-o-Y) to Rs 7686.5 crore, according to Motilal Oswal. Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to rise by 2.2 percent Q-o-Q (up 16.8 percent Y-o-Y) to Rs 2767.1 crore. Motilal Oswal report on ITC We expect cigarette volumes to grow 1.5 percent during the quarter. Traction in 64mm and near double-digit volume growth in premium cigarettes augurs well for FY14 volumes. We estimate net sales at INR76.9 billion, up 14.5 percent. Margins would expand 70bp to 36 percent, led by cigarettes and improving profitability in FMCG and others. Cigarette margins will be supported by 17 percent average price hike implemented post budget. We expect continued momentum in FMCG-Others sales with improving profitability. Higher tax rate should result in 15 percent PAT growth to INR18.4 billion. The stock trades at 25.4x FY15E EPS of INR12.8.