ITC is scheduled to publish its March quarterly numbers on Wednesday, May 18
Analysts estimate that the company’s net income will grow by 11-23 percent year-on-year (YoY). Although, in turn, it is much less likely. Net profit is projected to increase by 5-15 percent.
Analysts at brokerage firm Sharekhan say cigarette business revenue is expected to grow by 12-13 per cent a year and volume by 11 per cent. The non-cigarette FMCG business is expected to grow 5 percent due to low volume growth.
According to them, hotel business is expected to continue strong growth due to high mobility and paint-up demand while agribusiness is expected to register strong double-digit growth led by high exports.
Shares of the company have risen recently as investors believe that the war in Europe, which has crippled food availability around the world, will ultimately benefit the company. That is what analysts expect.
However, “higher input costs will lead to a 270 bps YoY decline in the gross margin and a 137 bps YoY decline in the operating margin. Gradually, margins are expected to remain flat. PAT will increase by 4% in the quarter, ”said Sherkhan.
Axis Securities also expects cigarette volume to grow by 7-8 percent per year and the FMCG segment to grow at a rate of 3 percent on weak consumer sentiment. Meanwhile, it plans to see strong growth in the hotel (strong demand), paper and agriculture (geopolitical crisis) business.
Brokers have projected the highest growth in brokerage. It saw a 15 percent increase in PAT driven by a 23 percent increase in sales. “The EBITDA margin is expected to decrease slightly despite the shrinking gross margin due to operating leverage benefits (hotels, paper) and cost rationalization,” it added.
At the end of the December quarter, ITC reported a 13 percent increase in net profit and a 31 percent increase in sales.
Yes Securities, which projects sales growth of 14 percent and profit growth of 5 percent, said strong margin performance for ITC will continue to be driven by operational efficiency.
According to the brokerage, the key observations for Q4 are:
– Perspectives on the Department of Hotels and FMCG
– Cigarette demand and price trends, and
– The performance of the Department of Agriculture and Packaging is advancing