ITC Ltd Q2FY20 Result Update

Revenue from operations grew by 7.3% (y-o-y) with EBITDA margin increasing by 1.1%. This has come at a time when there are talks about a 'slowdown' in the economy. Analysts remain bullish with target price ranging between Rs. 330 to Rs. 350 apiece. Uncertainty of cigarette taxation remains a major risk for the stock.

Cigarettes:

• 40.2% of the Revenue, contributing to 84.4% of PBIT
• Profitability: 72.2% (Very High)
• 6% incremental revenue with 96 bps margin improvement (Positive)

FMCG:

(Branded Packaged Foods Businesses; Apparel; Education and Stationery Products; Personal Care Products; Safety Matches and Agarbattis)

• 24.8% of the Revenue, contributing to 2% of PBIT
• Profitability: 2.8% (Low)
• 4% incremental revenue with 90 bps margin improvement (Positive)

Agribusiness:

(Agri commodities such as soya, spices, coffee and leaf tobacco)

• 20% of the Revenue, contributing to 5.5% of PBIT
• Profitability: 9.4% (Moderate)
• 19% incremental revenue with 122 bps margin decline (Neutral)

Paperboards, Paper & Packaging:

(Paperboards, Paper including Specialty Paper & Packaging including flexibles)

• 11.8% of the Revenue, contributing to 7.8% of PBIT
• Profitability: 22.7% (High)
• 10% incremental revenue with 91 bps margin improvement (Positive)

Hotels:

• 3.2% of the Revenue, contributing to 0.4% of PBIT
• Profitability: 4.1%
• 18% incremental revenue with 22 bps margin decline (Neutral)

Prominent brands under ITC:

Notes:

All numbers presented above are as per Standalone Financial Statements for 3 months ended 30 Sept 2019.

Source