ITC Shares Hit 3-Year High: ITC shares reached a new almost three-year high on Tuesday, rising 3% on the BSE after the major manufacturer of everything from hotels to cigarettes revealed better than anticipated sales growth momentum across businesses for the quarter ended June 2022. (Q1FY23). The stock reached its peak trading price in September 2018.
ITC, a diversified company, reported its net profit for the quarter (Q1FY23) at Rs 4,462.25 crore, up 33.46 percent from Rs 3,343.44 crore recorded a year earlier, on August 1.
ITC reported a 38% year-over-year (YoY) increase in its overall net profit, which totaled Rs. 4,169 crore, due to segment development. Profit for the same period a year ago was Rs 3,013 crore. Net sales were considerably beyond estimates, coming in at Rs 18,164 crore, up 41% year over year. Operating margins were constant at 30.8%. The corporation credited a “strong” performance across segments for the results.
ITC said in a press release that while the trajectory of inflation remains a key indicator to watch, the likelihood of a good monsoon and the recent moderated prices of important commodities, along with proactive government and Reserve Bank of India (RBI) interventions, bode well for a sustained economic recovery and an increase in consumption spending.
After several quarters of disruption and underwhelming growth, ITC has had strong growth across all segments. We predict that going forward, the company will be able to grow its cigarette business in the high single digits while also experiencing double-digit growth across the board. We continue to be optimistic about growth prospects, according to ICICI Securities.
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A significant benefit of the announcement is that “the impact of stable taxation together with measures by enforcement agencies reveals early indicators of share gain by legal cigarette sector from illicit traffic. The 1QFY23 result was strong, with outstanding performance in hotels and paperboards, as well as a slight beat in cigarettes – FMCG faced margin pressure as expected, according to global brokerage Jefferies, which also kept its Buy rating on ITC shares with a revised target price of Rs 360 per share (from Rs 305 earlier).
With the best quarterly revenue and Ebitda in more than ten years, hotels was a standout performance in the first quarter. YoY comparisons benefited from a low base, but the three-year revenue CAGR was similarly strong at 12%.
A significant benefit of the announcement is that “the impact of stable taxation together with measures by enforcement agencies reveals early indicators of share gain by legal cigarette sector from illicit traffic. The 1QFY23 result was strong, with outstanding performance in hotels and paperboards, as well as a slight beat in cigarettes – FMCG faced margin pressure as expected, according to global brokerage Jefferies, which also kept its Buy rating on ITC shares with a revised target price of Rs 360 per share (from Rs 305 earlier).
With the best quarterly revenue and Ebitda in more than ten years, hotels was a standout performance in the first quarter. YoY comparisons benefited from a low base, but the three-year revenue CAGR was similarly strong at 12%.
“In recent years, there has been a steady tax environment for cigarettes, which has allowed ITC to calibrate price rises to prevent a decline in demand. Over the medium run, we anticipate that this trend will result in increased cigarette volumes and profits visibility.
The stock’s rating of “outperform” has been maintained by brokerage firm CLSA, and the target price has been increased to Rs 330 per share.
While the tobacco industry saw volume growth of 25% and margin stability at 74%, the recovery in mobility aids a substantial recovery in revenue and margin.
According to CLSA, the non-FMCG sector is recovering quickly while the other FMCG sector showed strong growth and stable margin.
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