ICICI Direct's research report on ITC
ITC reported a strong set of numbers with 24% revenue growth led by 14.2% growth in cigarettes, 78.5% growth in agri business and 15.8% growth in FMCG business. With the recovery in out of home activity, cigarettes & paper business witnessed a recovery to pre-Covid levels. Cigarette volume grew ~7% during the quarter. FMCG business also saw strong growth with recovery in discretionary (deo, confectionaries & extruded snacks) categories. FMCG EBITDA margins improved 20 bps to 8.3%. The pace of improvement in FMCG margin was slower in Q4 with continued slower sales growth in high margin stationary business. Hotels business revenues declined 38.2% YoY but grew 22% sequentially. Operating profit saw 7.4% growth to Rs 4473 crore. Operating margins contracted 486 bps given the losses in hotels business and the impact of negative operating leverage. PAT witnessed a dip of 1.3% to Rs 3748.4 crore with higher tax payment compared to the corresponding quarter. The company declared a dividend of Rs 5.75 per share. With this the full year dividend is Rs 10.75 per share (100% payout).
Outlook
We value ITC on an SOTP basis with a revised TP of Rs 240 (earlier Rs 245) & maintain our HOLD rating.
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