ITC - Q1FY13 Result Update - Kotak

ITC's 1QFY13 financials, while only a partial reflection of state of the cigarette business following excise hikes and price hikes in the past quarter, provide some comfort of the demand situation. Cigarette volume growth has likely been in the region of 0%-1% for the quarter, indicating that demand has been only modestly affected. We continue to believe that ITC is on track to meet our FY13/ FY14 estimates.

ITC remains a prime defensive on account of the company's pricing power, high gross margins in the cigarette business; which create long-term visibility of 15%+ growth in profits. Other FMCG segment continues to hold out hope for stronger growth, with improving trends in profitability (continued gains of 3.5-4 ppt y/y gains in margins). Maintain ACCUMULATE, with revised price target of Rs 270.

Source : Equity Bulls

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