ITC Q4 Review – Resilient Performance; Cigarette Ebit Grew 12%: Centrum Broking

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ITC Ltd.’s Q4 FY22 results were mixed-bag. Revenue/Ebitda/adjusted profit after tax grew 16.5%/15.8%/11.8%.

Solid sequential recovery in cigarette business surpassed volumes at pre-Covid levels with 8- 9% growth.

ITC’s hotels/agri/paper segment grew 35.4%/29.6%/31.8% respectively. Despite high base (up 15.8%), other fast moving consumer goods business grew 12.3% driven by discretionary/out-of-home, yet staples and convenience foods remained resilient.

Gross margin contracted 132 basis points to 52.5% due to high share of agri exports. FMCG Ebitda margin rose to 9.0% driven by higher price increases and low single digit volumes.

Further, re-opening of schools could aid recovery in education/ stationary segment coupled with operating leverage and mix change could lead to double digit Ebitda margin soon in our view.

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