ITC Board has recommended Final Dividend of Rs 5.75 per Share. Total Dividend for FY21 is Rs 10.75 per share including Interim Dividend of Rs 5 per share, while FY20 dividend was Rs 10.15 per share. ITC witnessed robust growth of 24.1% in Q4 Gross Revenue; Q4 PBT up 7.6%; comparable Q4 PAT up 8.4% (after adjusting for one-time benefit in the corresponding quarter of the previous year). ITC saw strong sequential recovery across all operating segments. 

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ITC saw continued recovery in Cigarettes Business with progressive easing of restrictions and improved mobility; volumes touched nearly pre-Covid levels towards the close of the year. ITC Q4 Cigarette segment Gross Revenue up 14%; Q4 Net Revenue up 7% along with margin expansion of 70 bps. 

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ITC FMCG Segment sustains strong growth momentum. ITC Q4 comparable FMCG Segment Revenue up 16% on a relatively strong base vs Q4 FY20 comparable Revenue growth was 5%. Smart recovery in Discretionary / ’out-of-home’ categories; sales were up 23%. Staples, Convenience Foods and Health & Hygiene sales up 13%; Staples & Convenience Foods witnessed normalisation in demand, the Hygiene segment remained elevated albeit settling at lower levels compared to H1. FMCG Segment EBITDA is up 19% to Rs 306 cr; comparable Segment EBITDA up 36% with margin expansion of 115 bps. 

ITC Agri Business posts robust growth in Q4. ITC’s Q4 Agri Segment Revenue & Segment Results up 78.5% & 54.2% respectively. Wheat, rice, oilseeds, exports of value-added food safe spices and higher supplies to support enhanced scale in Branded Packaged Foods Businesses drive growth. 

ITC Paperboards, Paper & Packaging Segment continues its strong sequential recovery momentum with improvement in offtake across most end-user industries. Q4 Segment Revenue & Segment Results up 13.5% and 13.1% respectively led by strong volume recovery in paperboards, robust growth in Carton packaging exports and Flexibles packaging in domestic.

ITC saw Sequential improvement in Hotels Revenue aided by higher Occupancy and F&B business. After breaking even in Q3, Segment EBITDA improves further to Rs 25 crores in Q4; structural cost management interventions and revenue augmentation measures help in mitigating the impact of negative operating leverage.

ICICI Securities says ITC Cigarette volume rose 8% YoY in 4QFY21 with recovery to nearly pre-Covid levels towards the end; this should allay a lot of consensus concerns. FMCG business grew by 16% YoY (6% on 2-year CAGR basis). Focus on portfolio fortification (120+ launches in the year), small packs, augmented distribution may potentially help ITC to outperform industry growth in FY22. FMCG EBITDA margin expansion of 180 bps (comparable for FY21) to 8.9% was decent. ICICI Securities reiterates ADD rating on ITC, with target price of Rs 240.

ICICI Securities sees:

(1) Potential market share gains for ITC
(2) FMCG scale up and profitability improvement to continue for ITC
(3) Potential to accelerate cost savings through a supply chain recast for ITC
(4) Healthy pay out with full-year dividend of Rs 10.75/share for ITC. 

ITC revenue was up 23% while EBITDA was up 7% YoY; PAT was down 1% YoY. Cigarette gross revenues grew 14% YoY, with volume growth of 8% as volumes recovered to near pre-Covid levels with easing restrictions. Cigarettes EBIT was up 8% YoY to Rs 36.7 bn. Sequential recovery was primarily driven by metros and large town markets on the back of progressive easing of restrictions and enhanced mobility. 

ITC strengthened its supply chain by

(1) strengthening direct reach in target markets
(2) augmenting stockist network in rural/semi‐urban markets

ICICI Securities says ITC FMCG revenues grew 16% YoY on a reported basis. Adjusting for the Lifestyle retailing business restructuring, Sunrise acquisition and stationery products (impacted due to closure of educational institutes), revenue grew 16% on a relatively strong base. Staples, Convenience Food and Health & Hygiene products (78% revenue contribution) growth accelerated to 13% (11% in 3Q) while discretionary and out-of-home consumption products further recovered to a 23% growth (from +11% in 2Q). Segment EBIT was up 28% YoY on a reported basis. Adjusted EBITDA was up 36% YoY with margin expansion of 115bps YoY.

ICICI Securities says Agri business revenue grew 79% on a weak base (driven by trading opportunities in Rice, oilseeds & Wheat and higher supplies to support captive packaged foods business). EBIT margin declined 90bps to 5.6% due to adverse business mix. Hotels business further improved sequentially (+22% QoQ; -38% YoY) due to higher occupancy and pick-up in F&B business, reported Rs 0.4 bn EBIT loss. Hotel business, after being EBITDA positive in Dec’20, reported an EBITDA of Rs 250 mn. Paper revenue increased 14% YoY and EBIT was up 13% YoY with a marginal dip in EBIT margins to 19.5%.