January 30, 2017 / 15:31 IST
Motilal Oswal's research report on ITC Net revenues increased 4.3% YoY (est. of -4% YoY) to INR92.5b. EBITDA margin contracted 80bp YoY (est. of - 100bp). EBITDA thus grew 2.1% YoY (est. of -6.4%) to INR 35.5b, while PAT before other comprehensive income rose 6% YoY (est. of -3%) to INR 26.5b.
OutlookNear-term challenges and uncertainties remain due to (1) less favorable cigarette volume base going forward, (2) potential cess on cigarettes under the GST and (3) likely excise increase on cigarettes in the national budget next week. However, cigarette volumes and Other FMCG sales have shown some resilience in a weak market. At 25.6x FY18E, ITC trades at a significant discount to peers. Maintain Buy with target multiple of 28x Dec-2018E EPS (in line with three-year average P/E), leading to a TP of INR 295 (prior: INR 290).
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