ITC Q1 preview: Low base, cigarette enterprise to spur income, revenue development

ITC Q1 preview: Low base, cigarette enterprise to spur income, revenue development

ITC Q1 preview: Not like its lacklustre inventory efficiency on the bourses for the reason that previous one yr, ITC is more likely to submit a powerful present within the June 2021 quarter (Q1FY22) when it posts its outcomes on Saturday, July 24, helped by a low base and restoration in cigarettes gross sales, say analysts. They eye a strong double-digit revenue and income development on a yearly foundation, though the quarter-on-quarter (QoQ) efficiency might disappoint.

Throughout the quarter ended June, shareholders misplaced over 7 per cent of their wealth parked in ITC whereas Nifty50 provided 7 per cent returns throughout the identical interval.

The corporate has been within the information lately on account of presidency’s plans to dump its stake held through Specified Enterprise of the Unit Belief of India (SUUTI), larger dividend to the mother or father firm (BAT) and the corporate suing a blogger for defamation.

What now stays to be seen is that if the inventory can snap out of the vary following Q1 outcomes that it has been caught in for a couple of months. That mentioned, on the earnings entrance, analysts anticipate revenue after tax (PAT) to develop between 21-53 per cent year-on-year (YoY) whereas income is seen within the vary of Rs 22-35 per cent. In quarterly phrases, the figures might slide in double-digits.

This is a take a look at what prime brokerages are saying:

ICICI Direct

We anticipate ITC to witness a 29.3 per cent YoY income development led by 33.7 per cent development within the cigarettes section, primarily on account of extreme adversarial gross sales in base quarter, ICICI Direct opined. It tasks Q1FY22 income at Rs 12,284.9 crore as towards Rs 9,501.75 crore posted in corresponding quarter final yr. In accordance with the brokerage, QoQ, income might fall 13.22 per cent from Rs 14,156.96 crore posted within the previous quarter.

“Although we consider cigarettes gross sales would have been impacted resulting from second Covid-19 wave, stocking at sellers ranges in April would have offset the unfavourable affect. Equally, paper section gross sales are anticipated to develop 50.4 per cent with sustained restoration in person trade. FMCG section is more likely to witness development of 12.8 per cent through the quarter. We anticipate 19.6 per cent gross sales decline in agri section resulting from excessive

base and muted lodges section gross sales resulting from second Covid-19 wave,” the brokerage mentioned in a word.

Working margins are more likely to develop 355 bps YoY to 31.4 per cent whereas we anticipate internet revenue to develop 33.4 per cent YoY to Rs 3,125 crore, it added. ITC’s internet revenue in June 2020 quarter got here in at Rs 2,342.76 crore. Sequentially, the revenue is seen declining 3.3 per cent from Rs 3,748.41 crore posted in March quarter

this yr.


Cigarette enterprise income is anticipated to extend by 28 per cent with quantity development of 32-33 per cent, Sharekhan analysts mentioned, including that non-cigarette FMCG enterprise is anticipated to develop by 12-13 per cent. Amid these projections, it pegs Q1 income at Rs 11,542.2 crore, up 21.5 per cent YoY. Sequentially, it might decline by 18.5 per cent.

In the meantime, it sees June quarter revenue at Rs 2,883.6 crore, implying a development of 23.1 per cent, yearly. On QoQ foundation, the determine is anticipated to say no by the identical quantum.

Higher working leverage and low base would assist working margin to enhance by ~200 bps YoY to 29.8 per cent however fall ~170 bps, sequentially.

Motilal Oswal Monetary Companies

This brokerage expects cigarette quantity to develop 22 per cent. As for different FMCG gross sales, it sees demand to stay strong. General, it pegs Q1FY22 income development at 20 per cent YoY to Rs 11,418.2 crore however a sequential decline of 19 per cent.

Gross margin and Ebitda margin are more likely to develop 30 bps and 530 bps YoY, respectively.

Web revenue for the quarter, as per the brokerage, is more likely to rise 42 per cent on a yearly foundation to Rs 3,321.9 crore. “Outlook for Agri and resort companies will key monitorable,” the brokerage mentioned.

Phillip Capital

The brokerage expects the PAT to develop 53 per cent on a softer base to Rs 3,584.5 crore however decline 4.4 per cent QoQ.

“Cigarette quantity would get better, though, they may nonetheless stay decrease than pre-Covid ranges. The tailwinds for FMCG enterprise would recede versus the primary lockdown,” the brokerage mentioned. It pegs Q1 income at Rs 12,899 crore, up 35.75 per cent YoY and down 9 per cent.

Ebitda margin to see c 420 bps growth owing to beneficial product combine to 34.1 per cent from 29.7 per cent in the identical quarter final yr.