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ITC

ITC ended fiscal 200-03 with a total income of Rs 6,035.37 crore (Rs 5,201.58 crore), up 16 per cent from the previous year. Its total spending too went up by an equal percentage to Rs 4,664.02 crore (Rs 4,011.86 crore) resulting in a net profit growth of just 15 per cent. This is not the attribute of a growth stock and the stock price is reflecting it.

At Rs 5,865.78 crore (Rs 5,059.23 crore), net sales were up 16 per cent from the year-ago period.

What is heartening is the 44 per cent rise in the turnover of agri business. Revenue from the paperboards business was up 13 per cent over the previous year. Operational cost at Rs 3,712 crore (Rs 3,155.96 crore) was up 18 per cent from the year-ago period.

Other expenditure went up 17 per cent over the previous year. Operating profit was up 13 per cent (same as the previous year) at Rs 2,153.78 crore (Rs 1,903.27 crore), while OPM fell to 37 per cent from 38 per cent during the same period in the previous year.

Other income was up 19 per cent to Rs 169.59 crore (Rs 142.35 crore), while interest cost went down 55 per cent over the previous year to Rs 29.84 crore (Rs 66.91 crore).

Overall, a moderate top line performance saw pre-tax profits improve by 15 per cent over the corresponding previous period to Rs 2,056.19 crore (Rs 1,780.26 crore) leading to a 16 per cent rise in the tax provisioning at Rs 684.84 crore (Rs 590.54 crore).

Net profit at Rs 1,371.35 crore (Rs 1,189.72 crore) was up 15 per cent from the year-ago period. However, this picture is deceptive. As with turnover, profitability too is stagnant/falling as the quarterly picture shows.

For the fourth quarter, net sales were down 11 per cent year-on-year at Rs 1,519.86 crore (Rs 1,713.65 crore). Sequentially it went up 4 per cent from the December quarter sales of Rs 1,467.60 crore.

Other income was up 157 per cent on a year-on-year basis and 75 per cent sequentially. Due to reduced interest and depreciation provisioning, net profit was up 9 per cent on a year-on-year basis to Rs 323.42 crore (Rs 296.21 crore), while sequentially it was almost flat.

The stock, currently trading at Rs 743.75, discounts if full year EPS of Rs 55.41 by 14 times. There is hardly much growth and ITC remains an excellent trading buy whenever its P/E hits 11.

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