04 April 2012

ITC - More than price hike:: Emkay PDF link

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ITC
Reco: NOT RATED
CMP: Rs 227
Target Price: NA
More than price hike, Not Rated
We met the management of ITC during our Kolkata visit with institutional clients
·      Effective indirect taxation increase of 15% in Cigarettes; requires price hike of 7%, if everything else remains constant
·      Retains focus on Ebit growth in Cigarettes; implies portfolio actions and operations management alongside pricing actions
·      Focus on non-cigarettes business continues – (1) aiming breakeven in fmcg business (2) increasing room inventory by 40% or 3200 rooms and (3) paper-n-pulp capacity to increase 18% or 100,000 MT
·      With consensus forecasts of Rs9.2/Share and Rs10.6/share for FY13E and FY14E, ITC is trading at PER of 21X FY14E


Click here to read report: Company Update

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