What can be expected from ITC Q3 results?

MUMBAI: Cigarettes-to-hotels major ITC is witnessing a subdued session ahead of the third quarter results. According to ET Now poll estimates, the company is expected to report a net profit of Rs 2,600 crore in the October-December quarter, up 9.01 per cent, against a net profit of Rs 2385 crore in the year-ago period.

Net sales are seen increasing to Rs 9,700 crore, up 12.48 per cent, from Rs 8,623 crore in the corresponding quarter last fiscal.

The company’s cigarette business is likely to see a volume decline by 6-7 per cent Y-o-Y. Recent excise duty hike and price rises are seen impacting volumes.

The company raised cigarette price hike by 22 per cent on an average post budget. Earnings growth is expected at 12 per cent and EBIT margins are likely to remain strong at 65 per cent.

Its FMCG business is expected to post 11-12 per cent growth, hotels earnings growth is seen sluggish at 8 per cent and agri business growth is pegged at 12 per cent.

Meanwhile, Suruchi Jain, Equity Research Analyst, Morningstar India, has increased fair value of ITC by 5 per cent to Rs 406 per share.

“Despite several changes in cigarette regulations such as additional excise taxes, proposals for stricter pictorial warnings on cigarette boxes, as well as a ban on loose cigarette sales, we believe the company will continue to witness strong top-line growth on the back of selling highly addictive products,” she said.

“Investors should take opportunities like this, when there is heavy selling pressure in this stock, to build a position in this cigarette manufacturer which a substantial share of the Indian branded cigarette market. At current trading levels, we believe the stock is undervalued,” she added.

According to Prakash Gaba, CFT, prakashgaba.com, the stock has formed a base around Rs 350-360 and corrections are getting absorbed. He advises to buy the stock on dips as the stock can go up to Rs 390.

At 10:40 am, the stock was at Rs 367.20, down 1.08 per cent, on the BSE. It touched an intraday high of Rs 373.60 and a low of Rs 366.10 in trade today.