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ITC 3QFY01 net up 29% - Views on News from Equitymaster
 
 
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  • Jan 17, 2001

    ITC 3QFY01 net up 29%

    Tobacco major ITC Limited has logged in a 29% growth in its 3QFY01 net profits to Rs 2,160 m. This jump is on the back of an encouraging 15% growth in net turnover during the same period. The company net profit margins also went up from 17.4% in 3QFY00 to 19.5% in the current quarter. ITC's pays more than 50% of its revenues as excise duty. As a result, the net sales shown above are only half of its actual gross sales.

    (Rs m) 3QFY00 3QFY01 Change 9m FY00 9m FY01 Change
    Net Sales Turnover 9,608 11,088 15.4% 27,936 31,177 11.6%
    Profit after Tax/(Loss) 1,672 2,161 29.2% 5,675 7,099 25.1%
    Net profit margin (%) 17.4% 19.5%   20.3% 22.8%  
    No. of Shares (eoy) (m) 245.4 245.4   245.4 245.4  
    Earnings per share*       30.8 38.6  
    *(annualised)            
    Current P/e ratio         22.7  

    On a nine month consolidated basis, the net turnover of the company grew by nearly 12% and its net profit grew by more than 25%. The performance of the company is encouraging in the light of slowing sales growth in its main cash cow business of cigarettes.

    At the current price of Rs 874, the stock trades at a P/e multiple of 22.7 times its annualised nine month earnings. This valuation is low compared to its historical P/e's of 35-40 times its earnings.

    Going by the nine month results, ITC looks well set to meet our FY01E turnover projections. However, it might fall marginally short of our FY01E earnings estimates, owing to lower than expected earnings margins.

     

     

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