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Anand Rathi Securities
ITC (Buy)
Target: ₹285
CMP: ₹199.75
ITC Ltd reported a decline of 7.9 per cent in its consolidated revenue at ₹11,782.20 crore in Q4-FY20 as against ₹12,789.20 crore recorded in Q4-FY19. Revenue decline was mainly due to loss of sales in last 10 days of March which affected all the segments with cigarettes, FMCG, hotel, agri and paper businesses registering a decline. Cigarettes business registered a volume decline of nearly 12 per cent after factoring in the price hike taken in this segment.
On the profitability front, the company’s operating margins have improved by about 44 basis points to 38.2 per cent at ₹4,503.60 crore in Q4-FY20 as against 37.8 per cent at ₹4,832.20 crore in Q4-FY19. The company reported a growth of 9.1 per cent in its net profit which came in at ₹3,856.50 crore in Q4-FY20 as against ₹3,535.10 crore recorded the same period last year.
FMCG business is likely to witness sharp growth in Q1-FY21 given that most of the product portfolio consist of essentials (packaged food and soaps).
The company remains a clear leader in the FMCG industry in terms of annual Free Cash Flow generation.
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