ITC - March 2013 Results Preview - Motilal Oswal

- We expect ITC to post ~2% cigarette volume growth in 4QFY13E.

- Net sales to grow at 17.8% to INR81.9b led by robust performance of cigarette and FMCG portfolio.

- Expect margin expansion of 190bp to 34.4%.

- Cigarette margins should benefit from price hikes and mix improvement, in our view.

- We expect ITC to post breakeven in the FMCG business in 4QFY13E.

- Company is in the process of implementing ~15-16% price hikes, post the 18% increase in excise duty in the Union Budget.

- The stock trades at 28.4x FY14E EPS and 23.9x FY15E EPS. Buy.

- Two consecutive years of 15% plus price hikes can result in volume resistance and put the premium valuations at risk.

Source : Equity Bulls

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