ITC’s numbers for Q3FY21 were on expected lines with cigarettes business reporting 92% recovery in net sales and EBIT, marginally ahead of estimates.

Chirag Batavia • 19 April 2021

ITC Ltd

  • ITC’s numbers for Q3FY21 were on expected lines with cigarettes business reporting 92% recovery in net sales and EBIT, marginally ahead of estimates.

  • In 9MFY21, ITC introduced health soaps, disinfectant sprays, body wash, wipes and masks under Savlon brand. It remains to be seen how ITC capitalizes on this and scales up.

  • For Q4FY21, we expect 9% yoy growth in cigarette volumes, 14% yoy growth in cigarette gross sales with 5% price-mix impact. We forecast 10% yoy growth in cigarette EBIT.

  • In the FMCG portfolio for Q4FY21, we expect sequential demand trends to hold, with some moderation in health & hygiene portfolio and recovery in discretionary segment. We model 15.2%/70% yoy growth in FMCG revenue/EBIT.

  • ITC offers a good combination of inexpensive valuations, healthy dividend yield and the promise of solid Long term growth in FMCG.

ITC Ltd: BUY

Dated: 19 th April 2021

CMP: Rs.208

Fair Value: Rs.265

Potential Upside: 27.4%
Market Cap: Rs.256,046 Cr
Time Frame: 12 months


Note: The above is a brief note on the company, based on the inputs of a KIE research report dated 12 th February 2021 & Strategy Preview Report dated 7 th April 2021, which is available on our website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental . Disclaimer: http://bit.ly/2n5AxIE


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