ITC shares gain ahead of Q4 results. Demerger, dividend & other things to watch

Shares of ITC edged higher in Thursday's trade ahead of the FMCG major's March quarter results. Analysts said investor would be keenly following the performance of hotels business, any commentary on the demerger of businesses and final dividend for FY23.

ITC shares rose 1.13 per cent to Rs 432.50 a piece on BSE. The stock hit a 52-week high of Rs 433.45 on May 8.

The FMCG major is likely to report 13-21 per cent YoY jump in profit on a 3-6 per cent rise in sales. Analysts said ITC's hotels business may do well on strong bookings; they see cigarette business logging 13-14 per cent YoY volume growth. Paperboards, paper & packaging business is seen reporting flattish growth but agri business may clock a double digit de-growth, analysts said.

Motilal Oswal pegged volume growth in cigarettes division at 13 per cent on yearly basis. It felt one should watch out for Hotels division's revenue growth and profitability and any commentary regarding the much-awaited demerger of businesses.

This brokerage expects profit at Rs 4,730 crore, up 12.8 per cent YoY. Sales are seen at Rs 16,050 crore, up 3.3 per cent. ICICI Securities sees net profit at Rs 4,911.8 crore, up 17.2 per cent YoY. Nuvama projected profit figure at Rs 4,856 crore, up 15.9 per cent. It sees revenue rising 5.1 per cent YoY to Rs 16,324 crore.

Prabhudas Lilladher is the most optimistic lot. It sees profit rising 20.8 per cent YoY to Rs 5,060 crore on 11 per cent rise in sales at Rs 17,236 crore. This brokerage pegs cigarette volume growth at 14 per cent.

ICICI Securities expects ITC's FMCG business to see strong growth of 19.1 per cent, led by higher growth in foods, discretionary and stationary segment. It sees 6.3 per cent revenue growth for ITC led by strong 15.9 per cent growth in cigarettes business.

"We estimate 13 per cent volume growth in cigarettes. Hotels segment is estimated to grow 77.8 per cent YoY, led by post-Covid pent up demand. The growth in paperboard segment is expected to moderate given raw material prices have declined and companies are taking price cuts accordingly. The segment is likely to grow 7.6 per cent in Q4. Agri business is likely to see 25.4 per cent sales decline on account of export restriction on wheat," it said.

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