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ITC: Smoking hot performance - Views on News from Equitymaster
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ITC: Smoking hot performance
Oct 29, 2010

ITC Limited has announced its 2QFY11 results. The company has reported a 16.8% YoY and 23.5% YoY growth in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Top line for ITC grew by 16.8% YoY in 2QFY11, bolstered by a strong growth in FMCG (including cigarettes), hotels, paper and packaging and agriculture businesses.
  • Operating (EBITDA) margins increased marginally as all costs remained flat (as a percentage of sales) on the back of lower other expenditure (as a percentage of sales).
  • Net profit grew by 23.5% YoY during the quarter. This increase was a result of growth in operating income, higher other income, lower interest charge and lower depreciation.
  • For 1HFY11, ITC’s net profits grew by 22.7% YoY while net profit margins expanded by 1.2% to 23.2%. This performance comes on the back of higher operating income, increase in other income, fall in interest and lower depreciation.
(Rs. m) 2QFY10 2QFY11 Change 1HFY10 1HFY11 Change
Net sales 44,050 51,472 16.8% 86,028 99,945 16.2%
Expenditure 28,148 32,723 16.3% 56,253 64,825 15.2%
Operating profit (EBDITA) 15,901 18,749 17.9% 29,775 35,120 18.0%
EBDITA margin (%) 36.1% 36.4% 34.6% 35.1%
Other income 684 1,245 81.9% 1,560 2,230 42.9%
Interest (net) 181 54 -70.5% 240 112 -53.5%
Depreciation 1,484 1,640 10.5% 3,000 3,237 7.9%
Profit before tax 14,920 18,300 22.7% 28,095 34,001 21.0%
Extraordinary inc/(exp) 0 0 0 0
Tax 4,821 5,833 21.0% 9,209 10,831 17.6%
Profit after tax/(loss) 10,099 12,467 23.5% 18,886 23,171 22.7%
Net profit margin (%) 22.9% 24.2%   22.0% 23.2%  
No. of shares (m) 3780 7677   3780 7677  
Diluted earnings per share (Rs)*     5.8  
Price to earnings ratio (x)         29.1  

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