ITC share price hits 52-week high, rallies a whopping 7% post Q1 results

ITC share price spiked nearly 7 per cent to hit its fresh 52-week high on Friday after the cigarette-to-FMCG firm reported 10 per cent increase in standalone net profit at Rs 2,818.68 crore for the June quarter, aided by lower expenses, good growth in agri-business and other FMCG business despite decline in cigarettes sales.

The company had posted a standalone net profit of Rs 2,560.50 crore in the first quarter of last fiscal year.

Reacting to its earnings, the stock gained as much 6.9 per cent to Rs 307 on the BSE. The stock was the top gainer on Sensex and Nifty. 

The rally came as the cigarette volume growth of 1.5 per cent YoY on a base of 1 per cent was ahead of Street’s estimate. "Cigarette segment also saw ~7-8 per cent price hikes. Underlying FMCG sales jumped 14.3 per cent YoY (HUL grew 16% YoY on comparable basis) with Aashirvaad atta regaining from past controversy and recording single digit volume growth," said brokerage Edelweiss Securities in a research note.

It maintained 'hold' on ITC with a target price of Rs 328. 

"With per capita consumption 1/18th of China’s, the cigarette opportunity in India remains attractive. ITC is trading at 24.6x FY20E EPS versus HUL’s 48.2x FY20E EPS. This 50% discount is at the higher end and during good times it has shrunk to ~20%. However, with cigarette still contributing ~85% to EBIT, reliance on regulated business remains high. Hence, we maintain ‘HOLD/SP’ and value ITC on SOTP on FY20E to arrive at target price of Rs 328," said Edelweiss.

Meanwhile, ITC's revenue from operations came in at Rs 10,874.59 crore. It was at Rs 13,800.42 crore in the same quarter of last fiscal year. 

The two figures are not comparable as revenue from operations are net of GST after the implementation of the new tax regime from July 2017.

The company said its total expenses for the quarter under review stood at Rs 6,978.50 crore as against Rs 10,332.61 crore in the corresponding period of last fiscal year. 

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During the first quarter, revenue from cigarettes vertical stood at Rs 5,127.59 crore as compared to Rs 8,774.16 crore in the corresponding period last fiscal, down 41.5 per cent, ITC said.

Other FMCG segment had a revenue of Rs 2,870.03 crore as against Rs 2,600.89 crore in the same period a year ago.

ITC said its agri business had a revenue of Rs 3,151.27 crore as compared to Rs 2,760.52 crore in the corresponding quarter last fiscal. 

Hotels business posted a revenue of Rs 341.28 crore in the first quarter this fiscal as compared to Rs 304.89 crore in the same period last year, while the paperboards, paper and packaging vertical posted revenue of Rs 1,355.83 crore as against Rs 1,359.82 crore in the same period last fiscal.