ITC Q1FY19 Results: Healthy operating performance.

ITC’s 1QFY19 sales, EBITDA and net profit grew 13.5% (adjusted
for output taxes), 12.2% and 10.1% to INR107bn (net of taxes barring NCCD), INR42bn and INR28.2bn respectively. EBITDA was 5% higher than the estimate and net profit was 2% higher led by better performance in Cigarettes (EBIT grew 8.7% vs JMFe c.6%). Net profit growth (+10.1%) trailed EBITDA growth (+12.2%) due to a sharp 15% decline in financial income.

Key Highlights.

  • Hotels grew 11.9% and profit more than doubled (off a very weak base, though) helped by higher room rates.
  • Agri sales grew 14% but EBIT declined 17% due to adverse mix as topline growth was led more by lower-margin commodities while higher-margin leaf tobacco remained under pressure.
  • Paperboards revenue was flat as it remained impacted by weak demand in source industries and overcapacity in the country.
  • EBIT still grew 15% from benefits of strategic investments in imported pulp substitution, improved pulp yield and better sales mix.
  • The rise in the bottom line was driven by growth in its non-cigarette businesses on the back of a favourable base and improved realisations from cigarettes.
  • ITC’s entry in new FMCG categories and impetus to accelerate growth in existing categories would increase profitability.


How it fairs among the peers?


Stock to be impacted?

Company’s Non-cigarette business is showing strong performance after every quarter and is positive for the company (CMP 280, M. Cap 3,66,754 crores, 24.7 FY20 PE).

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