ITC Q1 Results: Profit Misses Estimates, Margin Contracts

ITC Ltd.'s net profit was little changed during the first quarter of fiscal 2025, and missed street expectations.

The standalone net profit of India’s largest cigarette-maker stood at Rs 4,917 crore in the quarter-ended June, as against Rs 4,903 crore a year ago, according to an exchange filing. That compares with the Rs 5,160-crore consensus estimate of analysts tracked by Bloomberg.

ITC Q1 FY25 Highlights (Standalone, YoY)

• Revenue up 7.2% to Rs 17,000 crore versus Rs 15,828 crore (Bloomberg estimate: Rs 17,158 crore).

• Ebitda up 0.7% to Rs 6,295 crore versus Rs 6,250 crore (Bloomberg estimate: Rs 6,497.37 crore).

• Margin at 37% versus 39.5% (Bloomberg estimate: 38%).

ITC's performance was impacted by paperboards and the fast-moving consumer goods business, on the back of a challenging macroeconomic and operating environment. Private consumption expenditure remains relatively subdued and competitive intensity remained high in certain categories such as biscuits, snacks, noodles, soaps, education and stationery products from local players, the company said in a statement.

"Moderating inflation, improving agri terms of trade, expectation of normal monsoons and the government's thrust on public infrastructure and the rural sector augur well for a pick-up in consumption demand, building on the green shoots of recovery that are visible in rural markets," it said.

Segmentwise (YoY)

• Cigarette revenue up 6.1% to Rs 7,918 crore driven by premium portfolio.

• FMCG-Others grew 6.3% to Rs 5,491 crore. Operating margin was up 25 basis points at 11.3%, with sequential uptick in prices witnessed in certain commodities like sugar, potato, choco cream and edible oil.

• Hotels grew 10.9% to Rs 666 crore despite fewer wedding dates, and elections impacting domestic travel as well as out-of-home dining.

• Agri grew 22.2% to Rs 6,973 crore led by value-added products such as coffee and spices as well as leaf tobacco exports. Stock limits on wheat and restrictions on exports imposed by the government limit business opportunities in the bulk commodities space. Moreover, sharp escalation in prices of leaf tobacco and other agricultural commodities, ocean freight, and supply chain disruptions weighed on margin.

• Revenue in paperboards, paper and packaging declined 6.8% to Rs 1,977 crore, impacted by low-priced Chinese supplies, muted demand and surge in wood prices.

Shares of ITC closed 0.3% lower at Rs 493.75 apiece before the results were announced, as against a 0.15% gain in the benchmark BSE Sensex.