Performance Highlights: Neutral

1QFY2012 Result Update | FMCG
July 29, 2011
ITC
NEUTRAL
Performance Highlights
CMP
Target Price
(` cr)
1QFY12
1QFY11
% yoy
Angel est.
% Diff
Revenue
5,767
4,824
19.6
5,692
1.3
EBITDA
1,883
1,607
17.2
1,893
(0.5)
32.7
33.3
(66)bp
34.2
(155)bp
1,333
1,070
24.5
1,301
2.4
OPM (%)
PAT
`208
-
Investment Period
Stock Info
Sector
FMCG
Market Cap (` cr)
1,61,185
Beta
Source: Company, Angel Research
For 1QFY2012, ITC declared steady growth in its top line and earnings (broadly
in-line with our estimates). We maintain our revenue and earnings estimates and
continue to remain Neutral on the stock.
During the quarter, ITC declared top-line growth of 19.6% yoy to `5,767cr
(`5,4824cr), in-line with our estimates. The cigarette division registered 12.9% yoy
growth in gross revenue (15.7% yoy growth in net revenue) on the back of higher
volume growth due to no hike in excise duty in cigarettes. Amongst other
segments, agri-business, paperboards and packaging and non-cigarette FMCG
posted growth of 26.5% yoy, 22% yoy and 19.4% yoy, respectively, while hotels
business grew by modest ~12% yoy. Earnings for the quarter grew by robust 25%
yoy to `1,333cr (`1,070cr), marginally above our estimates. The company has
been successful in reducing its losses in the non-cigarette FMCG business loss
during 1QFY2012 stood at ~`76cr (`89cr).
Outlook and valuation: We expect ITC to report a top line of `24,706cr
in FY2012E and `29,294cr in FY2013E, registering a CAGR of ~18% over
FY201113E. Growth would be driven by the companys diversified business
model and ability to invest in growing businesses. In terms of earnings, we expect
the company to report a `17.5% CAGR over the same period, backed by good
performance by all businesses. At the CMP of `208, the stock is trading at 23.4x
FY2013E EPS. We maintain our Neutral rating on the stock.
0.7
52 Week High / Low
211/150
Avg. Daily Volume
6,69,730
Face Value (`)
BSE Sensex
18,197
Nifty
5,482
Reuters Code
ITC.BO
ITC@IN
Bloomberg Code
Shareholding Pattern (%)

Promoters
0.0
MF / Banks / Indian Fls
42.1
FII / NRIs / OCBs
46.6
Indian Public / Others
11.3
Abs. (%)
Sensex
ITC
3m
1yr
3yr
(5.7)
1.1
31.9
8.7
34.4
119.4
Key financials (Consolidated)

Y/E March (` cr)
FY2010
FY2011
FY2012E
FY2013E
Net Sales
18,153
21,168
24,706
29,294
16.3
16.6
16.7
18.6
4,061
4,988
5,799
6,876
% chg
24.4
22.8
16.3
18.6
EBITDA (%)
33.5
33.8
34.0
34.2
EPS (`)
5.2
6.4
7.5
8.9
P/E (x)
39.7
32.3
27.8
23.4
P/BV (x)
5.7
10.1
8.3
6.7
RoE (%)
29.2
33.2
32.7
31.5
RoCE (%)
36.8
40.8
41.2
40.7
8.5
7.3
6.2
5.2
25.4
21.5
18.4
15.3
% chg
Net Profit (Adj)
EV/Sales (x)
EV/EBITDA (x)
Please refer to important disclosures at the end of this report
Sreekanth P.V.S
022 3935 7800 Ext: 6841
sreekanth.s@ angelbroking.com
1
ITC | 1QFY2012 Result Update
Exhibit 1: Quarterly performance

Y/E March (` cr)
1QFY12
1QFY11
% yoy
FY2011
FY2010
% chg
Net Sales
5,767.5
4,823.6
19.6
21,167.5
18,153.2
16.6
Consumption of RM
2,299.2
1,792.9
28.2
8,126.5
7,007.3
16.0
38.4
38.6
15.3
1,159.4
1,002.8
5.5
5.5
10.1
4,728.2
4,069.1
(% of Sales)
Staff Costs
39.9
37.2
394.2
341.9
(% of Sales)
Other Expenses
(% of Sales)
6.8
7.1
1,190.6
1,081.7
15.6
16.2
20.6
22.4
22.3
22.4
Total Expenditure
3,884.1
3,216.6
20.8
14,014.1
12,079.2
16.0
Operating Profit
1,883.4
1,607.0
17.2
7,153.4
6,074.0
17.8
32.7
33.3
33.8
33.5
OPM
Interest
Depreciation
Other Income
PBT (excl. Extr. Items)
16.5
12.4
32.6
48.1
64.8
(25.7)
166.5
159.7
4.2
656.0
608.7
7.8
236.6
135.1
75.0
818.8
614.7
33.2
1,937.0
1,570.1
23.4
7,268.2
6,015.3
20.8
23.4
7,268.2
6,015.3
34.3
33.1
20.9
2,280.6
1,954.3
31.4
32.5
4,987.6
4,061.0
23.6
22.4
771.4
381.8
6.5
10.6
Extr. Income/(Expense)
PBT (incl. Extr. Items)
(% of Sales)
Provision for Taxation
(% of PBT)
Reported PAT
PATM (%)
Equity shares (cr)
1,937.0
1,570.1
33.6
32.6
604.3
499.8
31.2
31.8
1,332.7
1,070.3
23.1
22.2
771.4
381.8
1.7
1.4
FDEPS (`)
24.5
24.5
20.8
16.7
22.8
(39.2)
All segments deliver impressive double-digit top-line growth

ITC declared steady top-line growth of ~20% yoy to `5,767cr (`4,823cr).
The cigarette division registered 12.9% yoy growth in gross revenue (15.7% yoy
growth in net revenue) on the back higher realisations (ITC took a price hike of
~5% in 4QFY2011) and improved product mix.
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
-
30.0
25.0
15.0
( %)
20.0
10.0
5.0
Top-line (LHS)
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
(` cr)
Exhibit 2: Steady top-line growth at 19.6% yoy
yoy growth (RHS)
July 29, 2011
Amongst other segments, agri-business, paperboards and packaging and

non-cigarette FMCG business posted growth of 26.5% yoy, 22% yoy and 19.4%
yoy, respectively, while the hotels business grew by modest ~12% yoy.
Exhibit 3: Segmental growth trend (yoy)

50
45
44
40
35
18
22
22
15
10
15
18
12
17
19
12
15
18
13
13
15
21
21
22
24
20
13
17
25
26
32
(%)
30
Cigarettes
Non-Cig FMCG
1QFY11
Hotels
2QFY11
3QFY11
Paperboards
4QFY11
Agri-Business
1QFY12
Earnings grow strongly by 25% yoy, aided by high other income

Earnings grew by robust 24.5% yoy to `1,332cr (`1,070cr), driven by steady
top-line growth, a 66bp yoy decline in tax rate, a massive 75% yoy jump in other
income to `236cr (`135cr). Operating margin dipped marginally during the
quarter as ITC also faced the brunt of increased raw-material prices. OPM was
down by 66bp yoy on account of a 270bp yoy gross margin contraction. ITC
reduced its other expenses by 178bp yoy and arrested the slippage in OPM.
70.0
30.0
25.0
July 29, 2011
yoy growth (RHS)
57.9 60.1
OPM
1Q12
30.7 32.7
4Q11
20.0
36.1
33.3 35.3
3Q11
30.5
2Q11
30.0
35.3 36.1
1Q11
5.0
32.2
3Q10
(%)
40.0
1Q10
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
PAT (LHS)
62.8 63.4 62.4
50.0
(%)
(` cr)
10.0
57.3
60.0
20.0
15.0
63.3 63.3 63.2
2Q10
1,610
1,410
1,210
1,010
810
610
410
210
10
Exhibit 5: OPM and gross margins flat yoy/dip qoq
4Q10
Exhibit 4: Strong earnings growth rate at 25% yoy
Gross margin
Exhibit 6: Segment-wise performance

Y/E March (`cr)
1QFY12
1QFY11
% chg
FY2011
FY2010
% chg
Cigarettes
5,269.9
4,669.7
12.9
19,827.6
17,283.0
14.7
Others
1,201.1
1,005.6
19.4
4,482.4
3,641.7
23.1
Hotels
252.5
225.1
12.2
1,077.4
910.8
18.3
Agri Business
1,707.1
1,349.8
26.5
4,748.0
3,862.1
22.9
Paperboards & Packg.
1,011.3
829.1
22.0
3,666.9
3,233.6
13.4
Less: Inter-Seg. Rev.
1,219.7
1,036.5
17.7
3,197.8
2,671.7
19.7
Total Gross Income
8,222.2
7,043.0
16.7
30,604.4
26,259.6
16.5
Cigarettes
20.8
5,766.8
4,938.1
16.8
(297.6)
(349.5)
266.6
216.6
1,576.7
1,305.0
Others
(76.3)
(89.3)
Hotels
51.3
38.5
Agri Business
157.1
123.1
27.7
566.3
447.8
26.5
227.0
188.5
20.4
819.2
684.3
19.7
1,935.8
1,565.8
23.6
7,121.3
5,937.3
19.9
Cigarettes
29.9
27.9
29.1
28.6
Others
(6.4)
(8.9)
(6.6)
(9.6)
Hotels
20.3
17.1
24.7
23.8
9.2
9.1
11.9
11.6
22.4
22.7
22.3
21.2
Total PBIT
33.2
23.0
PBIT Margin (%)
Agri Business
Cigarette segment registered double-digit sales and EBIT growth

ITCs cigarette division registered 12.9% yoy growth in gross revenue (15.7% yoy
growth in net revenue) in 1QFY2012, on the back of higher realisation (ITC had
taken a price hike of ~5% in 4QFY2011). On the margin front, ITC registered a
sharp 197bp expansion in EBIT margin on a gross level (233bp expansion on net
level) in its cigarette division to ~30%, aided by price hikes. We believe the
cigarette business is poised for double-digit growth in terms of revenue and EBIT in
FY2012E.
Exhibit 7: Peg cigarette division to grow at a 12% CAGR in FY2011-13E

6,000
35.0
5,000
30.0
25.0
20.0
3,000
15.0
2,000
(%)
(`cr)
4,000
10.0
1,000
5.0
-
Gross revenue (LHS)
yoy growth (RHS)
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
4Q09
EBIT margin (RHS)
July 29, 2011
Non-cigarette FMCG witnessing strong revenue traction

ITCs non-cigarette FMCG business registered steady revenue growth
19.4% yoy to `1,201cr (`1,005cr), driven by impressive performance from
branded packaged foods. Also, the businesss losses reduced by ~`13cr yoy
`76cr (`89cr). Going ahead, we expect revenue traction in the segment
continue and losses to reduce, though breakeven is likely to be achieved only
FY2013.
Exhibit 8: Revenue growth steady at 19% yoy
Exhibit 9: Losses reduce by ~`13cr yoy
(20)
30.0
(40)
15.0
5.0
(76)
(89)
(120)
1Q10
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
(86)
(100)
1Q10
(85)
(68)
(74)
yoy growth (RHS)
1Q12
(100)
(79)
4Q11
200
(67)
(80)
10.0
3Q11
400
(60)
2Q11
600
(` cr)
20.0
(%)
25.0
800
1Q11
1,000
(` cr)
4Q10
35.0
3Q10
40.0
1,200
2Q10
1,400
Gross revenue (LHS)
to
its
to
to
in
Hotels business shows a modest performance

ITCs hotels business registered modest growth of 12.2% yoy to `252cr (`225cr)
during the quarter, aided by the holiday season. The business segment reported
EBIT margin of 20% (expansion of 321bp yoy), driving strong 33% yoy growth in
EBIT. We believe the hotels business is well on track to post a 21% CAGR in
revenue during FY201113E, aided by low base and uptick in the economic
activity. Moreover, the margin of the business is likely to register significant
improvement as ARR recovers.
July 29, 2011
yoy growth (RHS)
(%)
(40.0)
(10.0)
40
(20.0)
(30.0)
EBIT (LHS)
1Q12
4Q11
3Q11
(40.0)
1Q10
1Q12
4Q11
20
3Q11
(30.0)
2Q11
50
1Q11
(20.0)
4Q10
100
3Q10
(10.0)
2Q10
150
Gross revenue (LHS)
10.0
60
2Q11
20.0
80
1Q11
200
30.0
100
4Q10
10.0
40.0
3Q10
250
120
2Q10
20.0
Exhibit 11: Rise in ARR to aid margins at 2627%
(` cr)
30.0
300
(%)
350
1Q10
(` cr)
Exhibit 10: Peg revenue at 21% CAGR over FY2011-13
EBIT margin (RHS)
Paperboard and packaging show resilience

The segment registered strong revenue growth of 22% yoy (21% on a net level) to
`1,011cr (`829cr). However, EBIT margin of the segment registered a marginal
contraction of 29bp yoy to 22.4%.
20.0
250
20.0
10.0
200
Gross revenue (LHS)
EBIT (LHS)
yoy growth (RHS)
1Q12
4Q11
1Q10
(40.0)
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
(40.0)
3Q11
(30.0)
2Q11
(30.0)
(20.0)
50
1Q11
(20.0)
200
(10.0)
100
4Q10
(10.0)
400
150
3Q10
600
10.0
2Q10
1,000
(` cr)
30.0
30.0
(%)
(` cr)
300
1,200
800
Exhibit 13: Margin to sustain at ~23% over FY12-13E
(%)
Exhibit 12: 9-10% revenue contribution in FY12-13E
EBIT margin (RHS)
Agri business registers strong revenue growth of 26.5% yoy

ITCs agri business registered 26.5% yoy growth in revenue to `1,707cr
(`1,081cr). The business segment reported a flat EBIT margin of 9.1%, aiding 22%
yoy growth in EBIT.
40.0
Gross revenue (LHS)
July 29, 2011
yoy growth (RHS)
(20.0)
(30.0)
(40.0)
EBIT (LHS)
1Q12
50
4Q11
1Q12
4Q11
3Q11
2Q11
(60.0)
1Q11
4Q10
(40.0)
3Q10
200
2Q10
(20.0)
1Q10
400
(10.0)
100
3Q11
600
1Q10
(` cr)
20.0
800
10.0
150
(%)
1,000
200
2Q11
60.0
20.0
1Q11
1,400
250
4Q10
80.0
3Q10
100.0
1,600
2Q10
1,800
1,200
(` cr)
Exhibit 15: Peg margins at 12-13% for FY2012-13E
(%)
Exhibit 14: Revenue grows 9.5% yoy/1.4% qoq
EBIT margin (RHS)
Investment Rationale
Cigarettes to grow by double digits and post impressive EBIT margis: We

believe the cigarette business is well poised to post double-digit sales and EBIT
growth in FY2012E. Moreover, we highlight that over the last 12 months, ITC
has strengthened its brand portfolio significantly with brands such as Flake
Excel and Duke Filter. The company also launched Lucky Strike and
Armenteros cigars (launched in select metros) at the premium-end and
test-marketed 59mm mid-size filter (micro-filters).
Non-cigarette FMCG to register a ~20% CAGR over FY2011-13E: While

cigarettes remain the main profit centre for the company, investments in
non-cigarette businesses such as FMCG, hotels and paperboards have started
yielding positive contribution. During the period FY201113E, we expect
non-cigarette EBIT to register a ~20% CAGR, aided by 1) reduction in
non-cigarette FMCG losses (likely breakeven in FY2013), 2) improvement in
hotel margins, aided by higher ARRs and uptick in the economy and 3) higher
margins in paperboards.
Outlook and valuation

We expect ITC to report a top line of `24,706cr in FY2012E and `29,294cr in
FY2013E, registering a CAGR of ~18% over FY201113E. Growth would be
driven by the companys diversified business model and ability to invest in growing
businesses. In terms of earnings, we expect the company to report a `17.5% CAGR
over the same period, backed by good performance by all businesses. . At the
CMP of `208, the stock is trading at 23.4x FY2013E EPS. We maintain our Neutral
rating on the stock.
Exhibit 16: SOTP valuation

Segment
Valuation
Multiple (x)
Enterprise Value (`cr)
Per Share Value (`)
EV/EBITDA
14.0
132,593
171
EV/Sales
4.5
838
Hotels
EV/EBITDA
14.0
7,412
10
Paperboards
EV/EBITDA
7.0
8,727
11
Agri-Business
EV/EBITDA
7.0
4,485
(4,613)
(6)
158,668
205
Cigarettes
Non-Cigarette FMCG (Others)
Less: Net Debt/ (Cash)
Total Equity Value

July 29, 2011
Exhibit 17: Key Assumptions

FY2010
FY2011
FY2012E
FY2013E
14.3
7.2
6.7
20.8
(10.7)
14.6
0.4
14.7
(2.8)
18.0
23.1
18.3
13.4
22.9
17.0
8.5
7.9
19.7
19.4
(5.7)
(11.0)
17.4
4.9
11.9
19.3
22.7
22.3
10.7
28.6
(9.6)
23.8
21.2
11.6
29.1
(6.6)
24.7
22.3
11.9
34.0
1.0
27.0
23.2
12.9
34.0
1.0
27.0
23.2
12.9
164.7
(20.3)
8.8
18.4
28.3
188.3
(15.7)
9.8
21.7
36.3
236.1
(8.7)
11.0
18.9
28.4
288.5
2.7
12.8
21.5
27.9
Top-line growth (%)

Cigarettes
Volume growth (%)
Realisation growth (%)
Non-Cigarette FMCG
Hotels
Paperboards
Agri-Business
PBIT Margin (%)
Cigarettes
Non-Cigarette FMCG
Hotels
Paperboards
Agri-Business
RoCE (%)
Cigarettes
Non-Cigarette FMCG
Hotels
Paperboards
Agri-Business
Exhibit 18: Peer Valuation

Company
Reco
Mcap
(` cr)
CMP
(`)
Asian Paints
Neutral
29,983
Britannia
Neutral
5,758
Colgate
Reduce
Dabur
Accumulate
GSKCHL
Reduce
GCPL
Accumulate
HUL
Neutral
ITC
Neutral
Marico
Neutral
P/E (x)
FY12E FY13E
EV/Sales (x)
FY12E FY13E
RoE (%)
FY12E FY13E
CAGR #
Sales
PAT
TP
(`)
Upside
(%)
3,126
(3)
30.5
24.8
3.2
2.7
39.6
38.3
17.3
19.8
482
31.3
21.4
1.1
1.0
37.8
46.1
17.3
36.0
13,217
972
869
(11)
30.1
25.7
5.0
4.3
111.7
108.0
14.9
12.9
18,147
104
115
10
25.9
22.6
3.6
3.1
44.9
41.6
20.5
18.8
10,143
2,412
2,163
(10)
29.2
24.5
3.4
2.8
32.6
31.8
17.3
17.5
14,099
436
478
10
24.1
21.0
3.6
3.2
38.7
28.0
13.4
18.2
70,676
324
(1)
27.8
24.3
3.0
2.7
74.8
74.6
12.5
17.1
161,185
208
(2)
27.8
23.4
6.2
5.2
32.7
31.5
17.6
17.4
10,279
167
(5)
31.6
25.3
3.0
2.6
31.5
29.5
15.7
30.8
Source: Company, Angel Research; Note: denotes CAGR for FY2011-13E
Exhibit 19: Angel v/s Consensus estimates

Top-line (` cr)
FY2012E
FY2013E
Angel estimates
24,706
29,294
Consensus
Diff (%)
25,405
(2.8)
28,960
1.2
EPS (`)
Angel estimates
Consensus
Diff (%)
FY2012E
FY2013E
7.5
7.8
(3.9)
8.9
9.1
(2.4)
July 29, 2011
Exhibit 20: Return ITC v/s Sensex (indexed to 100)

220%
Sensex
200%
Exhibit 21: Oneyr forward P/E

300
ITC
15x
18x
21x
24x
250
Share Price (`)
180%
160%
140%
120%
100%
200
150
100
50
Exhibit 22: One-yr forward P/E
Exhibit 23: One-yr forward Premium v/s Sensex
35.0
100%
30.0
80%
25.0
Apr-11
Aug-10
Dec-09
Apr-09
Aug-08
Dec-07
Apr-07
Aug-06
Apr-05
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Dec-05
80%
60%
20.0
40%
15.0
10.0
20%
5.0
0%
July 29, 2011
-20%
Apr-02
Oct-02
Apr-03
Oct-03
Apr-04
Oct-04
Apr-05
Oct-05
Apr-06
Oct-06
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
Apr-11
Jul-05
Nov-05
Mar-06
Jul-06
Nov-06
Mar-07
Jul-07
Nov-07
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Profit & Loss Statement

Y/E March (` cr)
Gross sales
Less: Excise duty
FY09
FY10
FY11
FY12E
FY13E
21,356
23,144
26,260
30,604
35,468
41,735
7,408
7,532
8,106
9,437
10,762
12,442
Net Sales
13,948
15,612
18,153
21,168
24,706
29,294
Total operating income
13,948
15,612
18,153
21,168
24,706
29,294
% chg
14.7
11.9
16.3
16.6
16.7
18.6
Total Expenditure
9,544
10,753
12,079
14,014
16,319
19,290
Cost of Materials
6,017
5,958
7,007
8,127
9,586
11,366
Advertising Exp
378
502
512
624
692
850
Personnel
733
891
1,003
1,159
1,359
1,611
Others
2,416
3,402
3,557
4,105
4,682
5,463
EBITDA
4,404
4,859
6,074
7,153
8,388
10,004
% chg
11.3
10.3
25.0
17.8
17.3
19.3
(% of Net Sales)
31.6
31.1
33.5
33.8
34.0
34.2
Depreciation& Amortisation
438
549
609
656
714
770
EBIT
3,965
4,309
5,465
6,497
7,674
9,233
% chg
10.4
8.7
26.8
18.9
18.1
20.3
(% of Net Sales)
28.4
27.6
30.1
30.7
31.1
31.5
18
65
48
25
25
Other Income
611
535
615
819
830
844
(% of PBT)
13.4
11.1
10.2
11.3
9.8
8.4
4,572
4,826
6,015
7,268
8,479
10,052
16.4
5.6
24.7
20.8
16.7
18.6
PBT (reported)
4,572
4,826
6,015
7,268
8,479
10,052
Tax
1,452
1,562
1,954
2,281
2,679
3,177
Interest & other Charges
Share in profit of Associates

Recurring PBT
% chg
Extraordinary Expense/(Inc.)
(% of PBT)
PAT (reported)
Add: Share of associates
Less: Minority interest (MI)
31.8
32.4
32.5
31.4
31.6
31.6
3,120
3,264
4,061
4,988
5,799
6,876
PAT after MI (reported)
3,120
3,264
4,061
4,988
5,799
6,876
ADJ. PAT
3,120
3,264
4,061
4,988
5,799
6,876
% chg
15.6
4.6
24.4
22.8
16.3
18.6
(% of Net Sales)
22.4
20.9
22.4
23.6
23.5
23.5
Basic EPS (`)
4.0
4.2
5.2
6.4
7.5
8.9
Fully Diluted EPS (`)
4.0
4.2
5.2
6.4
7.5
8.9
15.6
4.6
24.4
22.8
16.3
18.6
% chg
July 29, 2011
FY08
10
Balance Sheet
Y/E March (` cr)
FY08
FY09
FY10
FY11
FY12E
FY13E
377
377
382
774
774
774
SOURCES OF FUNDS
Equity Share Capital
Preference Capital
Reserves& Surplus
11,681
13,358
13,683
15,179
18,724
23,342
Shareholders Funds
12,058
13,735
14,064
15,953
19,498
24,116
214
178
108
99
77
57
Minority Interest
Total Loans
Deferred Tax Liability
545
867
785
802
802
802
12,817
14,780
14,957
16,854
20,377
24,975
Gross Block
8,960
10,559
11,968
12,766
15,736
18,599
Less: Acc. Depreciation
2,791
3,287
3,825
4,421
5,135
5,905
Net Block
6,169
7,272
8,142
8,345
10,602
12,694
Capital Work-in-Progress
1,127
1,214
1,009
1,333
1,259
1,488
Investments
2,935
2,838
5,727
5,555
6,340
7,125
Current Assets
7,031
8,172
8,143
10,203
9,466
11,885
570
1,031
1,126
2,243
554
1,403
Loans & Advances
1,662
1,860
1,595
1,766
2,174
2,578
Other
4,799
5,280
5,422
6,194
6,738
7,905
Current liabilities
4,444
4,716
8,064
8,582
7,290
8,217
Net Current Assets
2,587
3,456
79
1,621
2,176
3,668
12,817
14,780
14,957
16,854
20,377
24,975
Total Liabilities
APPLICATION OF FUNDS
Goodwill
Cash
Misc Exp
Total Assets
July 29, 2011
11
Cash Flow Statement

Y/E March (` cr)
FY08
FY09
FY10
FY11
FY12E
FY13E
Profit before tax
4,572
4,826
6,015
7,268
8,479
10,052
438
549
609
656
714
770
Change in Working Capital
(432)
(326)
291
(454)
(616)
Interest / Dividend (Net)
(337)
(276)
(267)
(336)
(395)
(414)
1,452
1,562
1,954
2,281
2,679
3,177
(80)
51
206
(25)
(45)
(29)
2,710
3,262
4,901
5,287
5,620
6,587
(Inc.)/ Dec. in Fixed Assets
(2,242)
(1,686)
(1,204)
(1,122)
(2,896)
(3,092)
(Inc.)/ Dec. in Investments
172
144
(2,889)
172
(785)
(785)
Cash Flow from Investing
(2,071)
(1,542)
(4,093)
(950)
(3,681)
(3,877)
Depreciation
Direct taxes paid

Others
Cash Flow from Operations
July 29, 2011
Issue of Equity
45
45
721
904
Inc./(Dec.) in loans
14
(37)
(70)
(9)
(22)
(20)
Dividend Paid (Incl. Tax)
1,365
1,543
1,630
4,452
4,001
2,256
Interest / Dividend (Net)
(337)
(276)
(267)
(336)
(395)
(414)
Cash Flow from Financing
(969)
(1,259)
(712)
(3,220)
(3,628)
(1,862)
Inc./(Dec.) in Cash
(330)
461
95
1,117
(1,689)
849
Opening Cash balances
900
570
1,031
1,126
2,243
554
Closing Cash balances
570
1,031
1,126
2,243
554
1,403
12
Key Ratios
FY08
FY09
FY10
FY11
FY12E
FY13E
P/E (on FDEPS)
51.7
49.4
39.7
32.3
27.8
23.4
P/CEPS
22.1
20.6
17.0
28.6
24.7
21.1
6.5
5.7
5.7
10.1
8.3
6.7
Y/E March
Valuation Ratio (x)
P/BV
Dividend yield (%)
1.7
1.8
4.8
2.1
1.2
1.2
EV/Sales
11.3
10.1
8.5
7.3
6.2
5.2
EV/EBITDA
35.9
32.4
25.4
21.5
18.4
15.3
EV / Total Assets
12.3
10.7
10.3
9.1
7.6
6.1
EPS (Basic)
4.0
4.2
5.2
6.4
7.5
8.9
EPS (fully diluted)
4.0
4.2
5.2
6.4
7.5
8.9
Cash EPS
9.4
10.1
12.2
7.3
8.4
9.9
DPS
3.5
3.7
10.0
4.5
2.5
2.5
32.0
36.4
36.8
20.6
25.2
31.2
RoCE
33.1
31.2
36.8
40.8
41.2
40.7
Angel RoIC (Pre-tax)
43.2
38.8
50.2
57.3
50.9
49.1
RoE
27.7
25.3
29.2
33.2
32.7
31.5
Asset Turnover
1.7
1.6
1.6
1.7
1.7
1.7
Inventory / Sales (days)
106
108
91
91
83
81
20
16
18
16
17
17
Payables (days)
73
70
71
77
72
72
Net Working capital (days)
53
57
(21)
(11)
24
28
Per Share Data (`)
Book Value
Returns (%)
Turnover ratios (x)
Receivables (days)
July 29, 2011
13
Research Team Tel: 022 - 39357800
E-mail: research@angelbroking.com
Website: www.angelbroking.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
the past.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
investment positions in the stocks recommended in this report.
Disclosure of Interest Statement
ITC
1. Analyst ownership of the stock

2. Angel and its Group companies ownership of the stock
3. Angel and its Group companies' Directors ownership of the stock
4. Broking relationship with company covered
No
No
No
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
July 29, 2011
Buy (> 15%)

Reduce (-5% to 15%)
Accumulate (5% to 15%)

Sell (< -15%)
Neutral (-5 to 5%)
14

Performance Highlights: Neutral

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1QFY2012 Result Update | FMCG

July 29, 2011

Market Cap (` cr)

Source: Company, Angel Research

52 Week High / Low

Avg. Daily Volume

Face Value (`)

Shareholding Pattern (%)

MF / Banks / Indian Fls

FII / NRIs / OCBs

Indian Public / Others

Key financials (Consolidated)

Please refer to important disclosures at the end of this report

ITC | 1QFY2012 Result Update

Exhibit 1: Quarterly performance

Source: Company, Angel Research

All segments deliver impressive double-digit top-line growth

Exhibit 2: Steady top-line growth at 19.6% yoy

yoy growth (RHS)

Source: Company, Angel Research

July 29, 2011

ITC | 1QFY2012 Result Update

Amongst other segments, agri-business, paperboards and packaging and

Exhibit 3: Segmental growth trend (yoy)

Source: Company, Angel Research

Earnings grow strongly by 25% yoy, aided by high other income

Source: Company, Angel Research

July 29, 2011

yoy growth (RHS)

62.8 63.4 62.4

63.3 63.3 63.2

Exhibit 5: OPM and gross margins flat yoy/dip qoq

Exhibit 4: Strong earnings growth rate at 25% yoy

Source: Company, Angel Research

ITC | 1QFY2012 Result Update

Exhibit 6: Segment-wise performance

Paperboards & Packg.

Less: Inter-Seg. Rev.

Total Gross Income

Paperboards & Packg.

PBIT Margin (%)

Source: Company, Angel Research

Cigarette segment registered double-digit sales and EBIT growth

Exhibit 7: Peg cigarette division to grow at a 12% CAGR in FY2011-13E

Gross revenue (LHS)

yoy growth (RHS)

EBIT margin (RHS)

Source: Company, Angel Research

July 29, 2011

ITC | 1QFY2012 Result Update

Non-cigarette FMCG witnessing strong revenue traction

Exhibit 8: Revenue growth steady at 19% yoy

Exhibit 9: Losses reduce by ~`13cr yoy

yoy growth (RHS)

Source: Company, Angel Research

Gross revenue (LHS)

Source: Company, Angel Research

Hotels business shows a modest performance

Source: Company, Angel Research

July 29, 2011

yoy growth (RHS)

Gross revenue (LHS)