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Last Updated : Aug 08, 2019 04:03 PM IST | Source: Moneycontrol.com

Buy ITC; target of Rs 325: Sharekhan

Sharekhan is bullish on ITC has recommended buy rating on the stock with a target price of Rs 325 in its research report dated August 05, 2019.

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Sharekhan's research report on ITC


1QFY20 PAT of INR3.7b (significantly ahead of estimates), was led by higher treasury gains and lower provisions of INR7.9b (v/s est. of INR10.6b). NII declined 1% YoY to INR17.8b (in-line); however, domestic margins declined 10bp QoQ to 2.9% due to 5bp increase in cost of funds. Other income grew 58% YoY led by treasury gains of INR2.0b. Total income trailed opex growth of 16% YoY, resulting in modest PPoP growth of 6% YoY. C/I ratio stood at 44.6% (v/s 46.6% in 4QFY19). Loan book grew 12% YoY (2% QoQ decline) to INR1.8t while deposits grew 15% YoY to INR2.4t. Share of the RAM advances stood at 60.5% (v/s 56.4% in 1QFY19). CASA deposit growth moderated at 3.5% YoY, leading to a decline in CASA ratio to 34.2% (v/s 35.5% in FY19).


Outlook


We have increased our other income estimates leading to ~17%/14% increase in our FY20/FY21 earnings. Thus, RoA/RoE should improve to 0.6%/11% by FY21E. Maintain Buy with a revised TP of INR250 (0.7x FY21E ABV).


For all recommendations report, click here


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First Published on Aug 8, 2019 04:03 pm
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