ITC Q1 Review – Cigarette Volumes Improving Gradually; Ebit Growth Still Uncertain: Motilal Oswal

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ITC Ltd.’s reported Ebitda was in line with our estimates as better-than expected cigarettes and paper and packaging sales were offset by weaker than anticipated Ebit margins in cigarettes, fast moving consumer goods– others and hotels.

ITC’s cigarette Ebit was up 36.7% y-o-y in Q1 FY22 on a weak base (38.8% decline in Q1 FY21).

However, it was still 16.2% lower than Q1 FY20 levels, and there is little indication of segmental Ebit growth returning to over 10% levels anytime soon.

In the fmcg – others segment, we believe the rise in commodity costs poses a risk to segmental Ebit margin improvement in FY22, especially given the likely impact on Q2 FY22 as well.

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Motilal Oswal ITC Q1FY22 Result Update.pdf


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