ITC outperforms benchmark on strong earnings hopes; stock up to 2%

Shares of ITC traded up 2% to Rs 267.25 on BSE during Friday’s intraday trading in an otherwise weak market. This increase is explained by good earnings expectations thanks to the improvement in cigarette volumes and the announcement of a dividend. By comparison, at 10:22 a.m., the S&P BSE Sensex was down 1.8% at 54,695 points.

“A meeting of the company’s board of directors has been convened for May 18, 2022, to review the audited financial results for the three months ended March 31, 2022. The board will also consider the final dividend recommendation for the year aforementioned financial,” the company said in an exchange filing.

Previously, ITC paid an interim dividend of Rs 5.25 per share of Re 1 each for the financial year 2021-22.

The share price of Fast Moving Consumer Goods (FMCG) Cigarettes has traded near its 52-week high of Rs 273.10 which it touched on April 11, 2022. Over the past month , the stock gained 2%. , against an 8% drop in the S&P BSE Sensex. Meanwhile, over the past three months, the stock is up 13%, versus a 7% decline in the benchmark. The title also jumped 17% in six months, against a 9% drop for the Sensex.

While announcing third quarter results on February 3, 2022, ITC remained optimistic about a robust recovery in all markets, helped by increased mobility, agile supply chain and market services .

Analysts at Elara Capital believe that the cigarette category continues to see increased volume due to increased mobility and improved farm income during the Rabi season. “A better likely achievement during the Kharif season could also lead to increased farm incomes, leading to improved rural growth,” the brokerage firm added.

Meanwhile, Emkay Global Financial Services believes ITC is better positioned than its peers with improving cigarette performance and strong earnings visibility. “We expect ITC to post a relatively stronger quarter, with improved cigarettes and other divisions and less pressure on margins compared to its FMCG peers,” the brokerage added.

Analysts also estimate stable cigarette performance with sales/EBIT growth of 9%/10% and FMCG sales growth of 9% with flat margins year-on-year. “We expect strong performance in Paper and Agriculture with EBIT growth of 11%/38% and breakeven EBIT for Hospitality. After-tax profit growth is less than 8% due to lower other income and higher EIR,” Emkay Global Financial Services analysts said.

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscriptions to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor

About Nicole Harmon

Check Also

This small company with a 14,000% gain overtook Goldman Sachs and other big companies

The world, apparently, has a new financial giant. The world, apparently, has a new financial …