Buy ITC; target of Rs 370: Edelweiss

Edelweiss' research report on ITC

ITC’s Q4FY17 revenue, EBITDA and PAT growth of 14.0%, 7.5% and 12.1% YoY, respectively, came in line with estimate driven by flattish cigarette volumes (slightly ahead of our 1‐2% YoY dip estimate). Fifth consecutive quarter of non‐negative cigarette volume growth and no negative surprise in GST rate reaffirms our confidence of sustenance of cigarette volumes.

Outlook

With per capita consumption 1/18th China’s, cigarette opportunity in India remains attractive. Though illegal cigarettes are a big menace (one‐fifth of overall cigarette industry in India), GST implementation will mitigate the impact. We maintain ‘BUY/SO’ with target price of INR 370.