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Dolat Capital Report
ITC Ltd.'s Q3 FY23 revenues came below our estimate but profitability was in line with our anticipation. Our analysis suggest that the cigarette business reported ~15% volume growth during the quarter.
Miss in revenues was mainly attributed to lower sales in agri business during Q3. Impact of wheat and rice export restriction was higher than estimate.
Fast moving consumer goods business reported 18% growth was a positive surprise.
ITC's continuous improvement in cigarette business is encouraging. The business reported 11% sales compound annual growth rate over last three-years and 7% volume CAGR over the same period.
We have increased our FY23/24/25E earnings per share estimates at Rs 15.9/17.3/18.6 representing 6.8/7.4/6.8% revision. Twin impact of cigarette business market share re-gain from illicit trades and lower duty increase in the budget would help the business to improve margins.
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