Results to watch out - ITC, RIL, Wipro

Quarterly Results
The results expected today include ITC, RIL, HDFC Bank, Wipro, NIIT Tech, HDFC Life, IDFC Bank, Atul, Chennai Petro, Dwarikesh Sugar, Jubilant Food, Tata Elxsi, VST Ind.

Here is the street expectation for the companies:

ITC Q3 FY18 (YoY):
  • PAT seen rising 7.5% at Rs2,843cr.
  • Revenues likely to increase 9.1% to Rs10,086cr.
  • EBITDA may gain by 10% to Rs3,900cr.
  • Cigarette Volume seen at 3%.
The stock is currently trading at Rs275, up by Rs2.15 or 0.79% from its previous closing of Rs272.85 on the BSE. The scrip opened at Rs276.2 and has touched a high and low of Rs277 and Rs273.65 respectively.

ITC enjoys leadership position in all the segments. It caters to, and is continuously trying to gain market share in its FMCG segment through new product launches and newer segments. Cigarettes, where it has ~80% market share, has been marred by the aggressive tax incidence under GST. Additionally, the uncertainty of timelines for tax rate revision under GST makes the company more prone to volume volatility. Further, the FMCG segment is set to gain from the supply chain benefits post GST implementation and shift in demand to the organised players; however, we remain cautious on its profitability.

Hence, we are factoring in 6.0% revenue CAGR (net of taxes) over FY17-19E amidst high taxation for cigarettes. We are factoring flat volumes for the cigarette business. We expect EBITDA margin to remain flat over the same period and PAT to report CAGR of 7.1%.

RIL Q3 FY18 (QoQ):
  • PAT may gain 3% to Rs8,539cr.
  • Revenues likely to increase by 15% to Rs78,913cr.
  • GRM seen at 11.6 per barrel.

The stock is currently trading at Rs929.25, up by Rs9.95 or 1.08% from its previous closing of Rs919.3 on the BSE. The scrip opened at Rs922 and has touched a high and low of Rs932.35 and Rs922 respectively.

RIL is a vertically integrated company with business interests in energy and materials value chain. Its revenue in FY17 comprised of refining business (64%), petrochemical business (24%) and others (12%). The company has rapidly grown its broadband business (4G) through RJio owing to strong operating competitiveness and healthy consumer traction. We estimate revenue CAGR of 18.2% over FY17-19E on account of expansion of RJio and strong refining margin outlook.  Jio’s RMS (revenue market share) is expected to be ~30% over next few years.

Company’s margins are expected to remain robust due to firm demand and improving utilization in polyester segment. Refinery off-gas cracker (ROGC) has been commissioned and will be ramped up to full utilization by FY18E. In addition, company has commissioned 4 of its 10 petcoke gasifiers, which will ramp up over FY18-19E. Our outlook on refining remains strong with growth in petro-product demand outpacing supply additions. This should keep RIL’s GRM (Gross Refining Margin) in the US$11-11.5/bbl range. Consequently, we expect PAT CAGR of 12.2% over FY17-19E.






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