Dated: 2nd June 2021

ITC (ITC)-BUY

Result Update
Current Market Price (CMP) Target Price
Rs. 215 Rs. 257

Our fair value of Rs 257 offers upside of 19.5% from current market price.

Rationale:
• ITC offer a combination of decent growth and inexpensive valuation.
• There is promise of robust long term growth in FMCG.
• We expect earnings to grow by 10.4% in FY22E & by 11.6% in FY23E.
• Stock is currently trading at valuation of 16.5x P/E FY23E EPS.
• We value ITC using Sum of the Parts (SoTP) methodology

Q4FY21 Earnings Update:

Positives:
• Revenues grew 23% yoy to Rs13,295 cr, 16% ahead of our estimate.
• Cigarette volumes nearly recovered to pre-Covid levels towards close of year.
• FMCG sales up 23% yoy off a weak base.
• Agri business registered 79% yoy (KIE 7%) growth in revenues.

Negatives:
• Operating profit grew 7% yoy to Rs4,473 cr, 2% below our estimate.
• Cigarette & FMCG earnings before interest & tax growth weaker than expected.
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This is a synopsis of the Research report issued by Kotak Securities Limited. This is not a comprehensive report
and before taking any investment decision we request you to refer the detailed report including disclaimers by
clicking here: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental. Further, the recipient of this
material should take their own professional advice before investing.
Holding Period: 12 months / Disclaimer: http://bit.ly/2n5AxIE