ITC Ltd - Q4 FY21 Result Update - YES Securities

(Rating: BUY, TP: Rs266 Upside: 23.4%)

View - We assume coverage on the stock with a BUY rating and a TP of Rs 266 based on 20x FY23E earnings, a significant discount of 50-60% to sector peers and a 15% discount to its long-term average multiple. We also believe concerns on ESG and FMCG business growth/margin trajectory look overdone. While valuation remains cheap for the stock, the stock can continue to remain range bound for now given lack of positive triggers either on growth or corporate action

Result summary - Gross and net revenue growth of 24.1% and 21.3% yoy led by strong growth in agribusiness and sequential recovery in other segments, EBITDA growth of only 7.4% with margin decline of 480bps to 33.6% given lower EBIT margins in cigarettes and agribusiness and losses in hotels, PBT growth 7.6% and PAT decline of 1.3%.

Segmental performance - Cigarettes saw 14.2% revenue and 7.7% EBIT growth, FMCG saw 15.8% revenue and 28.5% EBIT growth, hotels saw 38% revenue decline and loss of Rs 400mn at EBIT level, agribusiness saw 78.5% revenue and 54.2% EBIT growth and paper saw 13.1% revenue growth with 8% EBIT decline.

Shares of ITC LTD. was last trading in BSE at Rs.209 as compared to the previous close of Rs. 215.2. The total number of shares traded during the day was 2494504 in over 25023 trades.

The stock hit an intraday high of Rs. 212.5 and intraday low of 208.7. The net turnover during the day was Rs. 523903329.

Source : Equity Bulls

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