Revenue (net of GST) for the quarter increased 25.3% YoY to Rs 304.7 crore, above our estimate of Rs 269 crore. Cigarette sales increased 26% to Rs 245 crore led by 20% YoY volume growth along with blended price hike of 1-2% and change in product mix. There is significant shift towards the contribution of Rs5-6/stick price point which now contributes~60% of volumes from ~20% three years back. Aided by higher EBITDA, net profit for the quarter surged 23.6% YoY to Rs 75.7 crore.
OutlookThe company has a robust margin profile with its operating margin at 32.3% for FY19. With robust volume growth this quarter and strong volume growth guidance of 8% for FY20E, we upgrade the stock to BUY recommendation with a revised target price of Rs 4,200/share.
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