Last updated: 02 Jun, 2021 | 09:04 am
Revenue rises: ITC’s total revenue increased 20.8% year-over-year and 8.9% quarter-over-quarter to Rs.15,983 cr in the Jan-March quarter.
Net profits: Consolidated net profit fell 2.6% year-over-year and grew 6.4% quarter-over-quarter to Rs.3755 cr in the Jan-March quarter.
Operating efficiency: At the operating level, its EBITDA stood at Rs 4,871 cr and the margins reduced on a sequential basis to 31.62% from 33.87% in the December quarter.
ITC Q4 Dividend: ITC’s board recommended a final dividend of Rs. 5.75 per share including an Interim Dividend of Rs. 5 per share, making the total dividend for FY21 to be Rs. 10.75 per share.
Cigarettes: Continued recovery in Cigarettes Business with the progressive easing of restrictions and improved mobility; volumes touched nearly pre-Covid levels towards the close of the year.
Profitability improved significantly with EBITDA margin expanding by ~180 bps on the back of higher operating leverage, enhanced operational efficiencies, product mix enrichment, delayering of operations, reduced distance-to market and other structural interventions across the value chain. The performance of the segment was aided by a surge in demand for Staples, Convenience Foods, and Health & Hygiene products in the first half of the year and a strong recovery in the discretionary/out-of-home portfolio in H2FY21.
Agribusiness was the fastest-growing segment year over year. Revenues grew 78% while Profit before tax grew 45%. Wheat, rice, oilseeds, exports of value-added food-safe spices, and enhanced scale in Branded Packaged Foods Businesses led to strong growth. Subdued demand for leaf tobacco in international markets and adverse business mix, however, weighed on Segment Results.
Paper & Paperboards:
The Paperboards, Paper, and Packaging Segment was adversely impacted by subdued offtake in end-user segments such as publications, liquor, and wedding cards. However, robust growth in exports and strong demand in the pharma & décor segment helped partially mitigate the impact. A significant uptick in volumes and realizations in paperboards in the latter half of the year on the back of a recovery in most end-user industries, relentless focus on operational efficiency, and structural cost-saving interventions resulted in much improved performance.
While the hotel business is struggling a lot compared to FY20 which was free of any effects of Covid, It has started better compared to the December quarter which saw a loss of Rs.70 cr as compared to Rs.40 cr now. This was due to improved room occupancy and food & beverages sold in the hotels also driven by focused interventions including the introduction of special packages for target segments, the launch of curated food delivery/takeaway menus. Pick-up in revenues together with aggressive cost reduction measures led to the business turning EBITDA positive in H2FY21.
Outlook post results:
Goldman Sachs retains Buy
Global brokerage firm Goldman Sachs noted that the current valuation of ITC does not reflect a combination of Dividend Yield and growth potential. The brokerage firm noted that there has been a miss in Cigarette volumes and FMCG margins. It has lowered FY22-24 EPS estimates by 4-7% following the results. Goldman Sachs has a buy rating on the stock with a target price of Rs 245.
UBS maintains Buy
The brokerage firm said that the Cigarette business has recovered to Pre-Covid levels in Q4. FMCG business is ramping up, after the integration of Sunrise Foods. The total dividend of Rs 10.75 reflects a Dividend Yield of 5% at the Current Market Price. UBS has a share price target of Rs 260 on ITC.