Anand Rathi's research report on ITC
ITC’s Q4FY2021 cigarettes sales volume growth stood at 8% (net sale grew by 7%), in-line with street expectation of 8%-9% growth; EBIDTA margin up by 70 bps y-o-y. Sales volume recovered to pre-COVID level in Q4. Non-cigarette FMCG business revenue grew by ~16% each in Q4FY2021 and FY2021. EBIDTA margin reached ~9% in FY2021 (up by 590 bps over FY2018). With no increase in tax rate on cigarettes, we expect cigarette sales volume to gradually pick up (Q1FY2022 might some hiccup due to lockdown restrictions); FMCG is gaining good traction and will maintain its double-digit revenue growth and OPM expansion in the medium term.
Outlook
The stock is currently trading at attractive valuation of 15.4x its FY2023E EPS. The company paid dividend of Rs. 10.75 per share (dividend yield of 5%). We maintain Buy with a revised PT of Rs. 265.
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