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- 02 Aug 2022
- ICICIdirect Research
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ITC POSTS GOOD Q1FY23 NUMBERS
ITC - 473 Change: -4.65 (-0.97 %)News: Revenue witnessed a growth of 41.4% to Rs18320.2 crore (Idirect estimate : Rs15972.9 crore). On a 3-year CAGR basis, cigarettes, agri, papaerboard, FMCG & Hotels business saw 6.7%, 27.4%, 14.1%, 13.3% & 12.2% sales growth. Given no major pricing intervention in cigarettes in last one year, we believe volume growth would have been closer to 25% with some product mix improvement. Agri business sales grew by 82.7% driven by wheat, rice & tobacco exports and Papaerboard business grew by 43.3% with strong demands from end user industry & pricing growth. Gross margin was down by 162 bps. Operating profit saw a growth of 41.5% to Rs5647.5 crore(Idirect estimate : Rs4791.4 crore) with operating margins remaining flat at 30.8%. Net profit witnessed a growth of 38.4% to Rs4169.4 crore (Idirect estimate : Rs3687.3 crore).
Views: Revenue grew on account of robust growth of 29% in cigarette business, 82.7% growth in agri business, 43.3% growth in paperboard business & 19.5% growth in FMCG business. The strong growth in FMCG business was led by recovery in education & stationary business & strong growth in discretionary segments. Growth in Papaerboard business is led by strong demand from end user industries along with higher prices of paperboard, which also resulted in 220 bps improvement in segment margins. Gross margins was down due to higher contribution of Agri sales during the quarter & high commodity inflation in key raw materials of FMCG business. However, this was somewhat mitigated with high margins in Papaerboard business. After many quarters of disruption & lacklustre growth, ITC has witnessed robust growth across segments. We believe the company would be able to continue to growth in high single digit in cigarettes & double digit growth in all the other segments going forward. We remain positive on growth prospects.
Impact: Positive.