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The stock could see further re-rating, given that almost every segment has chipped in with better numbers.
Jump to full article: Business Standard (in), 2009-10-24
Intro: The highlights of ITC's sterling set of numbers for the September 2009 quarter are the strong performance of the cigarettes and agri businesses and smaller losses from the non-cigarette FMCG segment.
Not surprisingly, the stock closed 5 per cent higher at Rs 260 on Friday, with operating profit margins rising by 620 basis points year-on-year, to just under 36 per cent, on revenues of Rs 4,293 crore, up 14 per cent year-on-year.
The strong profitability pushed up the operating profit by nearly 38 per cent to Rs 1,537 crore. The cigarettes business has been remarkably resilient despite the ban on smoking in public places, the hike in value-added taxes in several states and the modest price hikes taken by the company.
In fact, the ITC stock was re-rated a few months back since cigarette volumes were seen to be growing at a good clip of 4-5 per cent and industry watchers believed the momentum would sustain. Moreover, the management has indicated that non-cigarette FMCG losses would be brought down to Rs 400 crore this year; while ITC posted a loss of around Rs 100 crore in each of six consecutive quarters, the loss in the September 2009 quarter was Rs 85 crore.
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