ET SpotlightMotilal Oswal has neutral call on with a target price of Rs 220. The current market price of ITC Ltd. is Rs 226.45.
ITC Ltd., incorporated in the year 1910, is a Large Cap company (having a market cap of Rs 278649.32 Crore) operating in Tobacco sector.
Financials
For the quarter ended 31-12-2020, the company reported a Consolidated sales of Rs 14124.48 Crore, up 7.43 % from last quarter Sales of Rs 13147.81 Crore and up 6.14 % from last year same quarter Sales of Rs 13307.54 Crore Company reported net profit after tax of Rs 3587.20 Crore in latest quarter.
Investment Rationale
Dividend yield of 5–6% is expected over the next two years (in line with global cigarette players). Moreover, the company is likely to see relief from cigarette sales gradually rebounding to near pre-COVID levels. However, these are not clear positives, as (a) global ESG concerns persist on cigarettes (85% of EBIT in FY20), (b) there is an overhang of a further GST increase on cigarettes, and (c) the earnings trajectory would continue to be weak (6.6% PBT CAGR over the last five years, now followed by a 7.9% CAGR expectation over FY20–FY23). The brokerage continues to value ITC at a 20% premium to the global peer average. Targeting 15x FY23E EPS, it gets TP of INR 220.
Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of Dec 30, 2020, while FIIs held 13.4 per cent, DIIs 42.9 per cent and public and others 43.7 per cent.
ITC Ltd., incorporated in the year 1910, is a Large Cap company (having a market cap of Rs 278649.32 Crore) operating in Tobacco sector.
Financials
For the quarter ended 31-12-2020, the company reported a Consolidated sales of Rs 14124.48 Crore, up 7.43 % from last quarter Sales of Rs 13147.81 Crore and up 6.14 % from last year same quarter Sales of Rs 13307.54 Crore Company reported net profit after tax of Rs 3587.20 Crore in latest quarter.
Investment Rationale
Dividend yield of 5–6% is expected over the next two years (in line with global cigarette players). Moreover, the company is likely to see relief from cigarette sales gradually rebounding to near pre-COVID levels. However, these are not clear positives, as (a) global ESG concerns persist on cigarettes (85% of EBIT in FY20), (b) there is an overhang of a further GST increase on cigarettes, and (c) the earnings trajectory would continue to be weak (6.6% PBT CAGR over the last five years, now followed by a 7.9% CAGR expectation over FY20–FY23). The brokerage continues to value ITC at a 20% premium to the global peer average. Targeting 15x FY23E EPS, it gets TP of INR 220.
Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of Dec 30, 2020, while FIIs held 13.4 per cent, DIIs 42.9 per cent and public and others 43.7 per cent.
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