ITC hits new high; market-cap inches closer to Rs 4 lakh crore mark

ITC hit a new high of Rs 320, up 3.6% on BSE in intra-day trade, extending its Friday’s 3% gain, after reported January-March quarter (Q4FY17) earnings.

At 10:41 am; the stock was trading 3% higher at Rs 318 on BSE, as compared to a marginal 0.03% rise in the S&P BSE Sensex.

With the strong rally in stock, the market valuation of ITC also inched closer to the Rs 4 lakh crore mark. With the market capitalization (m-cap) of Rs 385,436 crore, the ITC is Rs 14,564 crore or 4% away in joining Rs 4 lakh crore m-cap club.

Currently there are only three companies, Tata Consultancy Services (Rs 508,153 crore); Reliance Industries (Rs 439,318 crore) and HDFC Bank (Rs 419,119 crore) to have m-cap of more than Rs 4 lakh crore, the BSE data shows.

ITC posted a 12.3% yea-on-year (YoY) rise in its net profit at Rs 2,669 crore in Q4FY17, while its income from operations grew 6.15% at Rs 15,009 crore. Cigarette EBIT (earnings before interest and tax) margin expanded 107bps YoY to 36.4% for the quarter led by price hikes.

“Going ahead, assuming that taxes will not increase post Goods & Services Tax (GST) implementation, ITC's cigarette volumes will witness healthy recovery in volumes. Further the price hikes done by ITC during December 2016 and March 2017, will aid cigarette margins during FY18,” analyst at Antique Stock Broking said in a result review.

Given the clarity in tax regime post GST and recovery in earnings during the next two years, we believe that ITC will witness a re-rating and trade in line with the consumer sector average valuations, added report.

“Fifth consecutive quarter of non?negative cigarette volume growth and no negative surprise in GST rate reaffirms our confidence of sustenance of cigarette volumes. Though FMCG sales grew 6.5% YoY, up from 3.4% YoY in Q3FY17, they were still lower than expected; we expect it to grow in double digit in FY18 helped by entry in new segments,” analysts at Edelweiss Securities said in result update.

ITC Limited