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Net Sales are expected to increase by 42.8 percent Q-o-Q (up 7 percent Y-o-Y) to Rs 14519.87 crore, according to KR Choksey. ITC to report net profit at 2792.03 crore up 11.9% quarter-on-quarter.
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Analysts polled by CNBC-TV18 expect 2-3 percent decline in cigarette volumes. They say demonetisation impact may be limited on cigarette Volumes due to inelastic demand. The company raised prices on 30 percent of cigarette portfolio by 14-15 percent in second half of December.
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Net Sales are expected to decrease by 3.1 percent Q-o-Q (up 2 percent Y-o-Y) to Rs 9360 crore, according to HDFC Securities.
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Net Sales are expected to decrease by 5 percent Q-o-Q (up 41 percent Y-o-Y) to Rs 12935.78 crore, according to KR Choksey.
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Sanjay Manyal of ICICI Direct is positive on the stock on FMCG side. Food business is expected to grow at 15 percent plus compounded annual growth rate and will aid future growth for the company.
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Cigarette-hotel-to-FMCG major ITC is expected to show good performance in quarterly earnings on Tuesday as profit is likely to increase 10 percent year-on-year to Rs 2,673 crore with likely cigarette volume growth of 3-4 percent in Q2.
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In an interview CNBC-TV18, market experts Prakash Diwan and Deven Choksey analysed the earnings results of major companies announced so far and shared their outlook for results yet to come.
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Citi has a buy rating on the stock with an increased target price of Rs 295 per share. After 12 quarters of negative or subdued volumes, Q1FY17 retail volumes slightly higher at 4-5 percent is positive for the FMCG major. It adds that despite better volumes, mix shift to 64mm and constrained pricing have impacted cigarette EBIT slightly.
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Sanjay Manyal of ICICI Direct is upbeat on ITC going forward and expects FMCG business to do well.
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Analysts polled by CNBC-TV18 feel EBITDA may rise 8.2 percent at Rs 3663.4 crore in Q1 compared to Rs 3385.9 crore while margins may slip 50 basis points (bps) at 38.9 percent versus 39.4 percent year-on-year.
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Net Sales are expected to up 10 percent Y-o-Y to Rs 9357 crore, according to Axis Securities
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With retaining outperform rating, Credit Suisse increased target price to Rs 385 from Rs 370, saying the company recorded strongest EBITDA growth in 7 quarters and cigarette business performance was the best in 11 quarters
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There is a marked improvement in the visibility of earnings for ITC, says Ritwik Rai, analyst at Kotak Securities.
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Despite expectations of muted first quarter of FY17 on back of halt in cigarette production, FY17 will be better for the company, says Abneesh Roy of Edelweiss Securities.
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According to Motilal Oswal estimates, cigarette volume decline to moderate by 1-6 percent on annual basis. Some analysts are expecting flat to marginally positive volumes. If volumes manage to register growth, it will be after 11 straight quarters. Price hikes were seen in Classic and Goldflake.
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The October-December quarter has not been kind to FMCG companies. And this shows in the disappointing earnings reports turned by companies in the sector.
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Jefferies has maintained buy rating on ITC but lowered FY16-18 earnings per share (EPS) estimates by 3 percent and target price to Rs 381 per share mainly to account for higher tax rates. It says near-term earnings are likely to be weak but believes we are nearing the bottom of the weak demand cycle.
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Analysts polled by CNBC-TV18 feel cigarette volumes which contribute 40-45 percent to revenue may decline but more moderately. Cigarette volume is estimated to decline by 5-8 percent and may decline moderately owing to low base.
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Poor rural demand, low volume growth and lack of pricing power weighed on companies earnings last quarter. However, declining global commodity prices continued to be saving grace. Gross margins of few companies have expanded due to savings in raw material costs.
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“ITC numbers are pretty much driven by cigarettes business and cigarette revenues are just up by around 1.5 percent after taking price hikes in the range of 20-25 percent,†says Naveen Kulkarni of PhillipCapital.
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Cigarette volumes may see double digit decline for the fourth consecutive quarter but that decline may moderate from December quarter onwards, feel analysts. They expect cigarette volumes to decline by 11-15 percent in Q2 owing to price hikes against 16 percent fall in Q1FY16, 13 percent in Q4FY15, 14 percent in Q3FY15 and 5 percent in Q2FY15.
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Experts believe that ITC's crucial cigarette business will see a bounce back from third quarter of this year.
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According to a CNBC-TV18 poll, consolidated net profit is seen rising 6 percent year-on-year to Rs 2,320 crore and revenue is likely to increase 0.6 percent to Rs 9,300 crore during the quarter
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The fourth quarter numbers are not reflective of the price hike that ITC undertook after the increase in excise duty, says Naveen Kulkarni of PhillipCapital. Sources on the ground say, this has resulted in further decline in volumes, he adds.
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Naveen Kulkarni, Co-Head of Research at PhillipCapital, said that weak numbers were expected from ITC this quarter.
