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ITC Q1 preview: Healthy YoY rise expected, but COVID-related stress to dent numbers QoQ

The estimates of Kotak Institutional Equities show a 15.6 percent year-on-year (YoY) jump but a 22.5 percent quarter-on-quarter (QoQ) fall in Q1FY22 net sales.

July 24, 2021 / 07:58 AM IST

FMCG heavyweight ITC will release its June quarter numbers on July 24 which is expected to come on a softer side sequentially owing to COVID-related stress.

However, the numbers will be healthy on a yearly basis, supported by strong demand in the FMCG segment.

Besides the numbers, the outlook for agri and hotel businesses is expected to be in focus, brokerages said.

The estimates of Kotak Institutional Equities show a 15.6 percent year-on-year (YoY) jump but a 22.5 percent quarter-on-quarter (QoQ) fall in Q1FY22 net sales.

Adjusted PAT may jump 31.3 percent YoY but fall 17.9 percent QoQ. EBITDA may rise 35.7 percent YoY but 19.7 percent QoQ. EBITDA margin may rise 516 bps YoY and 121 bps QoQ, said Kotak.

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Kotak expects a 30.5 percent YoY growth in cigarette volumes, 33 percent YoY growth in cigarette sales (down 12 percent QoQ) led by 2.5 percent price/mix.

"We forecast 35 percent YoY growth in cigarette EBIT. On a 2-year CAGR basis, we build in a 9 percent decline in cigarette EBIT for the quarter," said Kotak.

In the FMCG segment, the brokerage firm does not expect any significant acceleration in the health and hygiene portfolio due to the COVID-19 second wave.

"We model 5 percent and 38 percent YoY growth (aided by Sunrise acquisition) in FMCG revenues and EBIT, respectively; we model 130 bps YoY expansion in FMCG EBIT margin to 4.9 percent. We expect hotel

revenues at Rs 140 crore with Rs 120 crore EBIT loss," said Kotak.

Edelweiss Securities expects revenues, EBITDA and PAT to grow 41 percent, 68.5 percent and 55.4 percent YoY, respectively.

On the base of -40 percent, cigarette volume growth, we expect cigarette volumes to grow nearly 22 percent YoY, said Edelweiss.

The brokerage firm expects the FMCG business to report nearly 5 percent YoY revenue growth on a base of 10.3 percent.

Hotels business may improve sequentially but continue to be impacted. However, optical growth is high at 800 percent on a soft base of -94.2 percent, Edelweiss said.

"Agribusiness should clock growth of 5 percent YoY a base of 3.7 percent growth. Paper business should see a 30 percent revenue growth on a base of -32.8 percent. We expect 580 bps YoY EBITDA margin expansion as the base quarter was impacted by negative operating leverage," Edelweiss said.

Brokerage firm Motilal Oswal Financial Services expects a 28.1 percent YoY growth in net sales while adjusted PAT may rise 41.8 percent. The brokerage firm expects cigarette volume growth of 22 percent.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Jul 24, 2021 07:58 am

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