Tobacco major, ITC Limited, has declared a 27% growth in bottomline in FY01, backed by a 9.4% growth in net turnover. The performance was more or less in line with our expectations.
Net Sales Turnover
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Earnings per share*
Current P/e ratio
The company's fourth quarter results saw a huge 43% decline in interest costs, which resulted in a 74% jump in 4QFY01 net profits YoY. However, the company's turnover growth saw a slowdown to 6%. The net turnover growth of the company during the previous nine months of FY01 was around 11.5%.
Due to the turnover slowdown in 4QFY01, ITC's overall turnover growth slipped to around 9% in FY01. It seems that ITC's decision to pass on the excise hike met with resistance in the market. Some consumers (particularly in the high end filter segment) may have switched to foreign brands which had become more competitively placed vis-a-vis ITC's brands. However, the volume details of cigarette sales are not known as yet.
However, despite the concerns on the sales side, the company has managed to record an attractive bottomline growth. This was largely on account of turnover growing at a faster clip than expenditure. As a result, ITC's operating margins improved by 480 basis points to over 40% in FY01.
The company has hiked the dividend per share to Rs 10 (Rs 7.5 per share in FY00). ITC's dividend payout has also gone up from 23.2% in FY00 to 24.4% in FY01.
At the current price of Rs 784 the stock trades at a P/E multiple of 19.1x its FY01 earnings and at 16.9x as per our FY02 earnings estimates. The stock has been stuck around this valuation for quite some time given the uncertainty over its future growth especially in its non-cigarette businesses. Historically, ITC has always managed to hold onto its market share in cigarettes even in adverse conditions and if it manages to do so this time around also, only then will the company see better valuations.
ITC Ltd has announced third quarter results of the financial year 2016-2017 (3QFY17). The company has reported 4.7% YoY and 5.7% YoY growth in revenues and net profits respectively. Here is our analysis of the results.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407