ITC Ltd revenues grew 23% yoy to Rs13,295 cr in Q4FY21, 16% ahead of our estimate on account of a significant beat in agri business.
Chirag Batavia • 19 July 2021
ITC Ltd: BUY
Dated: 19 th July 2021
CMP: Rs.208
Fair Value: Rs.257
Potential Upside: 23.6%
Market Cap: Rs.2,55,861 Cr
Time Frame: 12 months
- Revenues grew 23% yoy to Rs13,295 cr in Q4FY21, 16% ahead of our estimate on account of a significant beat in Agri business.
- Cigarette business witnessed month-on-month recovery during Q4FY21 with easing of restrictions and improved mobility until the second wave of the pandemic.
- Cigarette volume grew 7% yoy (11% decline in base quarter) as per our estimate & cigarette EBIT grew 8% yoy.
- FMCG business witnessed continued recovery for Q4FY21 in Discretionary/’out-of-home’ categories (sales up 23% yoy off a weak base) and normalization of demand in staples, convenience foods, health & hygiene products (sales up 13% yoy).
- Hotel segment registered good sequential recovery led by pick-up in weddings, getaways, staycations and robust recovery in F&B sales, while Agri business registered 79% yoy (KIE 7%) growth.
- ITC offers a combination of (1) inexpensive valuations (cigarettes business trading at 8-9X PE at CMP), (2) healthy dividend yield (5% at CMP), and (3) the promise of robust Long Term growth in FMCG.
Note: The above is a brief note on the company, based on the inputs of KIE research report dated 2 nd June 2021, which is available on their website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental . Disclaimer: http://bit.ly/2n5AxIE
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Home First Finance (HOMEFIRST) Home First remains consistent on operational and financial parameters. Home First (HFFC) reported 24% earnings growth, with 19% net interest income growth in Q2FY25. Gross stage-3 ratio was flat qoq at 1.7%, stage-2 ratio declined 6 bps qoq to 1.1%. While other asset classes have reported mixed trends residential home loans, as an asset class, continues to stand tall. Home First, with 85% home loan exposure, is well-placed on the above. We expect the company to deliver 25% earnings CAGR for FY25-27E. We remain assertive with a BUY rating and FV of Rs1,360 (no change). Note: The above is a brief note on the company, based on the inputs of KIEresearch report dated 25111Oct, 2024, which is available onour website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamenta1. Disclaimer: http://bit.ly/2n5Ax1E https://www.kotaksecurities.oom/ksweb/research/kotak-research-reports/top-weekly-picks
