ITC - 4QFY2016 Result Update - Angel Broking

ITC posted a healthy set of numbers for 4QFY2016, both on the top-line and the bottom-line front. The top-line was strong due to higher growth in Cigarettes & Agri businesses; however, higher taxes slightly dragged down the overall profitability of the company.

Key highlights: ITC's net sales for the quarter grew by 9.4% yoy to Rs. 10,169cr. The Cigarettes business posted a 10.2% yoy growth in net sales to Rs. 4,639cr, aided by price hikes, which enabled an 11.5% yoy growth in the segment's EBIT. The FMCG (Others) business posted a 5.4% yoy growth in net sales to Rs. 2,704cr, and an EBIT level profit of Rs. 71cr. Further, the Paperboards and Packaging division posted a growth of 3.0% yoy and 6.5% yoy in revenue and EBIT, respectively. The Hotels business posted a 4.8% yoy growth in its top-line, while it reported a flat growth at the EBIT level. The Agri business posted a strong growth of 26.5% yoy in revenue, while its EBIT grew by 6.1% on a yoy basis. Overall, the company's OPM expanded by 136bp yoy to 36.3%, owing to reduction in overall operating expenses.

Outlook and valuation: We expect ITC to report a top-line and bottom-line CAGR of 8.3% and 9.3% respectively over FY2016-18E. At the current market price, the stock is trading at 22.6x FY2018E EPS. We recommend a Buy on the stock with a target price of Rs. 380.

Shares of ITC LTD. was last trading in BSE at Rs.357.8 as compared to the previous close of Rs. 360.75. The total number of shares traded during the day was 415856 in over 5688 trades.

The stock hit an intraday high of Rs. 361 and intraday low of 353.35. The net turnover during the day was Rs. 147729789.

Source : Equity Bulls

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