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Last Updated : Jan 21, 2013 12:08 PM IST | Source: Moneycontrol.com

Accumulate ITC; target of Rs 320: KRChoksey

KRChoksey is bullish on ITC and has recommended accumulate rating on the stock with a target of Rs 320 in its January 19, 2013 research report.

 
 
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KRChoksey is bullish on ITC and has recommended accumulate rating on the stock with a target of Rs 320 in its January 19, 2013 research report.
 
“FMCG major ITC reported healthy performance with Net sales up by 23%YoY to Rs. 7712 crores, marginally below our estimates on the back of strong double digit growth in Cigarette (13%),FMCG-Others(30%) & Paper business (9%). FMCG segment revenue including cigarette grew by 18%YoY. EBITDA grew by 20%YoY to Rs. 2858 crores. OPM declined by 92bps YoY to 37.06%, on account of increase in employee cost and other expenditure.Net profit improved by higher rate of 21% YoY to Rs. 2052 crores on the back of higher other income (up 15%YoY).”
 
“ITC’s cigarette segment Net revenue grew by 13%. Segment recorded EBIT margins of 61.07% up by 403bps YoY largely on account of price hike taken by the company. We expect the core business to maintain strong growth driven by healthy volume growth (4-5%) for FY14E, driving the overall revenue growth for ITC. Revenue from FMCG Others grew by 30%YoY to Rs. 1783 crores driven by Packaged food, Personal care & Stationary segment. Losses lowered sequentially to Rs. 23.98 crores v/s Rs. 30 crores in Q2FY13. Losses were on account of launch and roll out costs of “Fiama Di Wills”, “Vivel” and “Superia” along with significant brand building costs of the foods business. Agri business reported growth of 43%YoY given by the growth in Cigarette business to which it sources leaf tobacco coupled with favorable agri commodity prices. Hotel business growth improved with sales growth of 11% YoY to Rs. 309 crores but EBIT margins declined by 1863 bps YoY to 17.93% as it reflects the gestation cost of opening of ITC Grand Chola luxury hotel in Chennai. Paper segment grew by 9%YoY with EBIT margins declining by 137bps.”
 
“We expect ITC to deliver revenue & EPS CAGR of 15% and 19% respectively over FY12-14E driven by superior product mix & leadership position in the core business and continued investments behind brands & distribution network. We upgrade our recommendation on ITC to Accumulate with a SOTP based target price of Rs 320,” says KRChoksey research report.


Public holding more than 90% in Indian cos


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To read the full report click on the attachment

First Published on Jan 21, 2013 11:52 am
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