ITC' cigarette business reported a 6.4 per cent growth in revenue at Rs 8,230.6 crore on yearly basis, leading to 8 per cent growth in EBIT and margin expansion of 50 basis points.
FMCG major ITC shares rallied over 2 per cent on Friday after the company posted a 10 per cent increase in standalone net profit at Rs 2,385 crore for the first quarter ended June 30, 2016, as compared to net profit of Rs 2,166 crore during the April-June quarter a year ago.
At 9.25 am, the scrip of the company was trading 1.82 per cent up at Rs 255.20. The share price opened at Rs 251.90 and has touched a high and low of Rs 256 and Rs 251.90, respectively in trade so far. Later, the share price of the company ended 0.44 per cent down at Rs 249.55.
The share price have also reacted to a robust performance of cigarette business, which reported a 6.4 per cent growth in revenue at Rs 8,230.6 crore on yearly basis, leading to 8 per cent growth in EBIT and margin expansion of 50 basis points. This was in line with analysts’ estimates.
“Cigarette volumes are estimated to have grown by around 1-2 per cent in line with our estimates. We continue to maintain our full year estimate of 2 per cent volume growth. Cigarette business accounted for 55 per cent of company’s gross sales and 86% of overall EBIT of the company for the quarter,” Reliance Securities said.
The brokerage house further said that ITC is estimated to post EPS of Rs 9.3 and Rs 10.5 in FY17E and FY18E respectively. The stock is currently trading at price earnings multiple of 24x FY18E earnings. It continues to maintain ‘BUY’ on ITC with revised target price of Rs 291, an upside of 16 per cent from the current levels.