ITC Q4 results preview: Net profit may see tax cut boost; revenues hurt by Covid-19 impact

Mumbai: Cigarettes-to-hotels company ITC may report a rise in net profit on the back of a cut in the tax rate, while revenues may dip, or show modest growth, hit by the Covid-19 pandemic-induced lockdown. The company is scheduled to report its earnings on Friday.

The key moniterables would be management commentary on outlook, cigarette volume growth, FMCG business update and recovery in paper business, analysts said.

Kotak Institutional Equities expects ITC to report a 6.2 per cent rise in March quarter net profit from a year ago, while revenues are seen declining 4.4 per cent.

The brokerage said it models 0.4 per cent year-on-year (YoY) decline in cigarette sales led by 5 per cent decline in volumes and about 4.5 per cent improvement in realizations. It also models 2 per cent and 23 per cent YoY decline in FMCG and Hotels segment, respectively, due to Covid-19.

Goldman Sachs expects ITC to report a 13 per cent growth in profit to Rs 3,979.4 crore, while sales may rise 5 per cent to 12,669.6 crore.

HDFC Securities sees ITC’s net profit dropping 1.7 per cent, while net sales may dip 2.2 per cent.

The brokerage expects cigarette revenue decline of 4.5 per cent YoY, with 6 per cent YoY volume dip. While non-cigarette business is expected to dip by 2.6 per cent with FMCG, Hotel, Agri and Paper business to register -3,-7,5 nad -3 per cent growth, respectively.

Nirmal Bang Institutional Equities expects ITC to deliver sales and EBITDA growth of 3.1 per cent and 4.7 per cent YoY, respectively. Cigarette volume is likely to decline by 3 per cent YoY on a base of 8 per cent growth, largely due to recent steep price hike, it said.

Mirroring the industry, other-FMCG business growth will be subdued at 6 per cent YoY, the brokerage said. A few were pessimistic.

Emkay Global expects ITC to post a 4 per cent decline in net profit and a 8 per cent decline in revenue. The brokerage estimates a decline of 14 per cent and 10 per cent, respectively, in cigarette volumes and sales, with EBIT decline of 11 per cent. It also sees FMCG sales declining by 5 per cent, with a 16 per cent fall in EBIT.





[Source – Economic Times]

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