ITC Q2 Results Review - Steady Performance, Expect Back Ended Returns: Prabhudas Lilladher

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Prabhudas Lilladher Report.ITC Ltd.'s Ebitda growth at 3% was below estimates due to sharp decline in paperboard segment Ebit by ~50% and moderation in cigarette volume growth to 4.9% on a normalised and high base. Fmcg Ebitda margins of 11% (36.8% Ebit growth) and 49.6% Ebit growth in hotels have been positive. We expect cigarette volume growth to moderate to 4-5% range in H2 FY24. Fmcg business is expected to gain from festive season, expected uptick in rural demand and scale economies. We believe paper and paperboard business is near bottom and expect QoQ margin improvement in coming quarters. We expect strong growth from hotels and fmcg to sustain given benign input costs and strong demand outlook for both domestic and foreign travel. We are largely retaining our estimates and introduce FY26 EPS. we estimate 9.7% earnings per share compound annual growth rate over FY23-26.We believe fmcg and IT services will add significant shareholder value over coming few years. ITC trades at 23.6 times September FY25 EPS with return on equity/return on capital employed of 32.8/42.3% and ~80% plus dividend payout. We assign SOTP based target price of Rs 492 (Rs 475 earlier) as we roll forward to September 2025. Valuations limit major downside, expect for any punitive cigarette taxes in future. We expect back ended returns post sharp appreciation over past couple of years. Retain 'Accumulate'..Click on the attachment to read the full report:.ITC Q2 Review - Delivers On Expectation; Competition Intensifies In Other Fmcg Businesses: Motilal Oswal.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

ITC Q2 Results Review - Steady Performance, Expect Back Ended Returns: Prabhudas Lilladher

Cigarette volumes up 4.9%, fmcg sales grow 8.3% with margins up 173 bps YoY; hotel outlook remains strong with higher ARR.

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