ITC Ltd., incorporated in the year 1910, is a Large Cap company (having a market cap of Rs 278649.32 Crore) operating in Tobacco sector.
Financials
For the quarter ended 31-12-2020, the company reported a Consolidated sales of Rs 14124.48 Crore, up 7.43 % from last quarter Sales of Rs 13147.81 Crore and up 6.14 % from last year same quarter Sales of Rs 13307.54 Crore Company reported net profit after tax of Rs 3587.20 Crore in latest quarter.
Investment Rationale
Dividend yield of 5–6% is expected over the next two years (in line with global cigarette players). Moreover, the company is likely to see relief from cigarette sales gradually rebounding to near pre-COVID levels. However, these are not clear positives, as (a) global ESG concerns persist on cigarettes (85% of EBIT in FY20), (b) there is an overhang of a further GST increase on cigarettes, and (c) the earnings trajectory would continue to be weak (6.6% PBT CAGR over the last five years, now followed by a 7.9% CAGR expectation over FY20–FY23). The brokerage continues to value ITC at a 20% premium to the global peer average. Targeting 15x FY23E EPS, it gets TP of INR 220.
Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of Dec 30, 2020, while FIIs held 13.4 per cent, DIIs 42.9 per cent and public and others 43.7 per cent.
