Mehabe score: 4 G Factor: 6 Piotski Score: 4 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 6 and Piotski score of 4.
Description
Established in 1910, ITC is the largest cigarette manufacturer and seller in the country. ITC operates in five business segments at present — FMCG Cigarettes, FMCG Others, Hotels, Paperboards, Paper and Packaging, and Agri Business. #
Main Points
FMCG – Cigarettes (45% of revenue)
ITC is the leader in the organised domestic cigarette market with a market share of over 80% #. It’s wide range of brands include Insignia, India Kings, Classic, Gold Flake, American Club, etc. #Site:ITCMain Symbol:ITC
Stock trades at 206.0, above its 50dma 205.95. It also trades above its 200dma 205.32. The stock remains bullish on techicals
The 52 week high is at 239.20 and the 52week low is at 163.35
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
-Stock is providing a good dividend yield of 5.21%.
– has been maintaining a healthy dividend payout of 79.34%
Weakness
– The company has delivered a poor sales growth of 4.68% over past five years.
Competition
– The industry trades at a mean P/E of 13.8x. ITC trades at the industry’s max P/E of 19.29x. ITC trades at a P/E of 19.3x
– Industry’s mean G-Factor is 6.0 while the mean Piotski score is 7.0. ITC has a G-Factor of 6 and Piotski scoreof 4.
– Average 1 month return for industry is 0.8%. The max 1- month return was given by Godfrey Phillips: a return of 12.43 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 14342.0 cr compared to Rs 11782.0 cr for period ended Mar 2020, a rise of 21.7%
Operating Profits reported at Rs 4871.0 cr for period ended Mar 2021 vis-vis 4504.0 for period ended Mar 2020 .
Operating Margins contracted -426.5 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 3.05 compared to Rs 2.87 for previous quarter ended Dec 2020 and Rs 3.14 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 49273.0 cr for period ended Mar 2021 vis-vis sales of Rs 49388.0 cr for the period ended Mar 2020, a fall of 0.2%. The 3 year sales cagr stood at 4.3%.
Operating margins shrank to 35.0% for period ended Mar 2021 vis-vis 39.0% for period ended Mar 2020, contraction of 400.0 bps.
Net Profit reported at Rs 13161.0 cr for period ended Mar 2021 vis-vis sales of Rs 15306.0 cr for the period ended Mar 2020, falling 16.3%.
Company recorded a Net Profit CAGR of 5.3% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 21.0% compared to 23.0% over the last 3 Years. – The stock has given a return of 4% on a 1 Year basis vis-vis a return of -9% over the last 3 Years. – The compounded sales growth on a TTM bassis is -0% vis-vis a compounded sales growth of 4% over the last 3 Years. – The compounded profit growth on a TTM basis is -15% vis-vis a compounded profit growth of 6% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 12.79% vis-vis 13.31% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 44.71% vis-vis 43.75% for Dec 2020
Conclusion
– is almost debt free.
-Stock is providing a good dividend yield of 5.21%.
– has been maintaining a healthy dividend payout of 79.34% – The company has delivered a poor sales growth of 4.68% over past five years.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 205.95 and is trading at 206.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
