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Dolat Capital Report
ITC Ltd.'s Q1 FY23 results exceed our estimates. Our analysis suggest that the cigarette business reported ~26% volume growth during the quarter versus our estimate of 20% volume growth.
Agri business posted 82% jump was significantly ahead of our estimate – resulted in sharp deviation from our anticipation.
A three times growth in hotel business was a positive surprise. However, 100 basis points decline in Ebitda margin was below estimate. Fast moving consumer goods business reported sequential drop in Ebit margin for the fourth consecutive quarter.
We have increased our FY23/24E earnings per share estimates of ITC by 9.6/8.2% to Rs 14.9/16.2 to factor in revenue and profitability improvement across segments in Q1 FY23.
As the cigarette business has started re-gaining market share from illicit trades, we believe that the margins would improve in the business.
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