ITC Q3 Results Review — Challenging Conditions Hampered Performance; 'Buy' On Dips, Says Dolat Capital

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Dolat Capital Report

ITC Ltd.'s Q3 FY25 revenue was below our estimate. Our analysis suggests that the cigarette business reported ~4% volume growth. However, given consolidation of industry volumes on a high base, the business reported 8.5% revenue CAGR over the last five years. We expect near-term volume and market share gain in this business.

The agri business posted a mere 10.8% growth, down from 46% jump reported in Q2. Further paperboard and packaging segment was impacted by low-priced Chinese and Indonesian supplies in global markets including India coupled with soft domestic demand and rising wood prices. High wood prices also impacted the segmental profitability during the quarter.

We have downward revised our FY25/26/27E EPS estimates by 7.1/6.3/5.9% at Rs 15.8/17.7/19.5 to factor in Q3 performance and demerger of the hotel business.

Maintain ‘Reduce’ rating with a SOTP based target price of Rs 467. Buy on dips.

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