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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