Equity Research Summary ITC Ltd.

Submitted By: Click to edit Master subtitle style Kapil Goyal IM-17, Roll No. 75

4/11/12

Recommendations For 4QFY2011. We recommend Neutral on the stock. 4/11/12 . ITC declared steady growth in its top line and earnings. We have marginally revised our estimates downward.

4/11/12 .

All Segments except Agribusiness show double digit growth 4/11/12 .

Earnings grow by strong 25% yoy aided by high other income 4/11/12 .

albeit on a highbase. We have modeled in growth of 4–5% in cigarette volumes for FY2012–13E. 4/11/12 .• Cigarette segment registered double-digit sales and EBIT growth We believe the cigarette business is poised for double-digit growth in terms of revenue and EBIT in FY2012E. • Price hikes and no further increase in excise duty by Govt.

8% yoy However. we expect revenue .• Non-cigarette FMCG witnessing strong revenue traction ITC’s non-cigarette FMCG business registered steady revenue growth of 16. losses reduced by ~`11cr During the quarter. the company launched Sunfeast Yipee noodles in two flavours. • • • • 4/11/12 Going ahead.

3% yoy growth in EBIT.Hotel business shows recovery as ARR improves • ITC’s hotel business registered robust growth of 18. driving strong 27.2% yoy to `324cr (`274cr) during the quarter. The business segment reported EBIT margin of 30.7% (expansion of 219bp yoy). We believe the hotel business is well 4/11/12 track to post a 21% CAGR in on • • . aided by the festive/holiday season.

1%. However.Paperboard and packaging segment shows resilience • The paperboard and packaging segment registered strong revenue growth of 15% yoy (14. EBIT margin of the segment registered a marginal contraction of 5bp yoy to 20. we expect the segment to post a modest 15% CAGR 4/11/12 in revenue during FY2011–13E.2% on a net level) to `962cr (`836cr). Going forward. • • .

1% yoy growth in EBIT.• ITC’s agri business registered 9. Going ahead.5% yoy growth in revenue (on high base) to `1.082cr (`988cr). The business segment reported a 217bp yoy expansion in EBIT margin to 9. we expect this segment to register a 4% CAGR in revenue over FY2011–13E (on account of flat global cigarette 4/11/12 Agri business registers another quarter of muted revenue growth • . aiding 43.2%.

despite high base of FY2011 on account of high price hikes (15–20% weighted average price hikes taken) likely to fully offset – 1) ~17% excise hike in Union Budget 2011–12 and 2) rise in VAT announced in several states. 4/11/12 • We believe the cigarette business is .Model double-digit sales and EBIT growth in cigarettes • We have modeled in volume growth of 4–5% in cigarette volumes for FY2012–13.

hotels and paperboards have started yielding positive results. investments in non-cigarette businesses such as FMCG.Non-cigarette to register a 23% CAGR over FY2011–13E • While cigarettes remain the main profit centre for the company. we expect noncigarette EBIT to grow at a 23% CAGR aided by – 1) reduction in noncigarette FMCG losses (likely 4/11/12 • . During FY2011–13E.

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Thank You 4/11/12 .

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