ITC falls as CS, CLSA cut target price to Rs 310 post Q4 earnings

MUMBAI: Shares of cigarettes-to-hotels major ITC fell as much as 2.87 per cent in intraday trade on Monday after the company reported a disappointing set of numbers on Friday for the quarter ended March 2015.

Post the results, Credit Suisse cut target price for ITC to Rs 310 from Rs 320, maintaining its 'Underperform' rating.

"We expect ITC to underperform till the next Budget, the brokerage firm said. Q4 performance does not auger well for H1FY16 volumes, it added.

CLSA also cut its target price for to Rs 310 from Rs 330 and maintained a 'Sell' call on the stock.

There will be double-digit decline in cigarette volumes and pressure is likely to continue in H1FY16, it said.

The stock ended the day flat, up 0.34 per cent, at Rs 328.45 on Friday.

The company reported a net profit of Rs 2360 crore, up 3.5 per cent, against a net profit of Rs 2280 crore in the corresponding quarter last fiscal. The PAT is lower than ET Now poll estimate of Rs 2530 crore.

Net sales stood flat at Rs 9,190 crore in Jan-March quarter against Rs 9,140 crore in the same quarter last fiscal. ET Now poll estimates sales to be at Rs 9700 crore.

"There would be negative reaction on thestock. The miss has been more than Rs 500 crore on the topline. It is much below than what we were expecting," said Sanjay Manyal, Research Analyst, ICICI Securities.

EBITDA rose to Rs 3,243 crore while EBITDA margin were at 35.3 per cent.

Cigarettes revenue edged up to Rs 4,210 crore, up 1.7 per cent, against Rs 4,141 crore, and cigarettes EBIT margins were at 64.3 per cent.

Hotels revenue were at Rs 346 crore against Rs 330 crore; paper and packaging revenue at declined to Rs 1,202 cr vs Rs 1,261 crore.

"We have been cautious on ITC for past one year due to frequent hike in excise duty. It has declined 20 per cent in last six months and we will advise hold on the stock," Manyal added.