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Company Report

ITC

ITCs incremental growth rates have been declining since the past three quarters and for the December quarter it reported a 13 per cent increase in revenues at Rs 1,501.84 crore (Rs 1,330.38 crore) over the previous corresponding quarter, while sequentially it was down by a percentage point over the September quarter revenues of Rs 1,519.61 crore.

However, cost control has enabled it to report a 11 per cent increase in net profit over the previous corresponding quarter at Rs 323.51 crore (Rs 265.63 crore) on a year-on-year basis but sequentially the same was down 15 per cent over the September quarter profit of Rs 380.50 crore.

Income from operations was Rs1,467.60 crore (Rs 1,308.40 crore) up by just 12 per cent over the year-ago period and down marginally from the preceding quarter revenues of Rs 1,470.30 crore.

The hotels business revenues were up 36 per cent on year-on-year basis and 34 per cent sequentially. At Rs 927.96 crore (Rs 838.63 crore) the operational costs were up 11 per cent over the previous corresponding quarter. Sequentially, the same went up 3 per cent over the September quarter costs of Rs 898.02 crore.

Other costs have, however, gone up with raw material consumption having increased by 18 per cent year-on-year and 21 per cent sequentially. The staff costs were also up 18 per cent while other expenditure went up by 7 per cent.

The operating efficiency, which seemed to be improving in the September, quarter, has again slipped with the year-on-year growth in operating profit back to 15 per cent (after having registered a 21 per cent year-on-year growth in the preceding quarter). Sequentially operating profit was down 6 per cent.

OPM at 37 per cent was slightly higher than what it earned during the corresponding quarter but down by 2 percentage points over the September quarter OPM of 39 per cent. Other income was Rs 34.24 crore (Rs 21.96crore) up 56 per cent over the previous corresponding quarter but down 31 per cent over the preceding quarter income of Rs 49.31 crore.

The stock currently trades at a PE of 13 times to its December quarter annualised EPS of Rs 52.28. ITCs bottomline growth has been impressive and the stock looks cheap but there is little clarity on where the company with its ragbag of businesses, is headed.

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