ITC, the conglomerate spanning cigarettes to hotels, reported a consolidated net profit of ₹5,335 crore for the third quarter of FY24, reflecting a 6% growth compared to ₹5,006 crore in the same period last year.
Key Financials:
- Revenue from Operations: ITC’s revenue for the December quarter increased by 2% year-on-year to ₹19,484 crore from ₹19,020 crore.
- EBITDA: Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA) in Q3FY24 declined by 3.2% to ₹6,024 crore, with EBITDA margin contracting by 180 basis points YoY to 36.6%.
- Segment Performance:
- FMCG segment showcased resilience with a 7.6% YoY revenue increase and a 100 bps expansion in EBITDA margin to 11.0%.
- Cigarettes segment witnessed consolidation on a high base, with a 2.3% YoY rise in revenue and PBIT. Cigarette volumes dipped by 2% YoY but increased by 5% QoQ.
- Hotels segment experienced its best-ever quarter, with an 18% growth in revenue and a remarkable 57% YoY increase in PBIT. EBITDA margin improved by 470 bps to 36.2%.
- Dividend Declaration: The ITC board declared an interim dividend of ₹6.25 per share for FY24, with a record date set for February 8.
Market Response:
- ITC shares witnessed a 1.02% decline, trading at ₹445.40 apiece on the BSE at 9:20 am.
Analysts’ Views:
- Emkay Global Financial Services:
- Maintains a positive long-term view on ITC, citing better execution and macro support for its diversified businesses.
- Acknowledges near-term challenges, including a 2% estimated volume decline in Q3FY24 for cigarettes.
- Maintains a ‘Buy’ rating, with a target price reduced to ₹520 per share from ₹550.
- Nuvama Institutional Equities:
- Despite Q3FY24 revenue and PAT exceeding estimates, cuts FY24E and FY25E EPS estimates by 5.2% each.
- Maintains a ‘Buy’ call with a revised target price of ₹535 per share, down from ₹560.
- Antique Stock Broking:
- Reduces estimates for ITC post-Q3FY24 by 3%/8%/6% for FY24/FY25/FY26.
- Remains positive on ITC’s performance driven by cigarette market share gains and momentum in FMCG and Hotels business.
- Maintains a ‘Buy’ recommendation with a target price of ₹499 per share, down from ₹532.
In conclusion, analysts express confidence in ITC’s long-term potential, with some foreseeing near-term challenges as entry opportunities. The stock’s current performance prompts adjustments in target prices while maintaining optimistic outlooks.