ITC Ltd.'s operating margin contracted to the lowest in nearly three years, missing analysts estimates by nearly 4 percentage points.
The company's margin contracted by 470 basis points to 32.8%, according to its stock exchange notification on Thursday. That was the lowest since the second quarter of the financial year-ended March 2022, when it had clocked 32.5%, according to the data compiled by NDTV Profit via Bloomberg.
The company attributed the pressures to subdued demand conditions, unusually heavy rains in parts of the country, high food inflation, and sharp escalation in certain input costs.
"The quarter witnessed excessive rains in August and September and a resurgence in food inflation which led to CPI hitting a nine-month high. The combination of these factors along with inflationary trends in commodity prices weighed on consumption expenditure and the FMCG sector," ITC said in an investors' presentation.
Net profit of the cigarette-to-hotel conglomerate rose 3% on a yearly basis in the July-September quarter to Rs 5,078.34. The analysts tracked by Bloomberg had pegged the bottom line at Rs 5,154 crore.
ITC Q2 FY25 Results: Key Highlights (Consolidated, YoY)
Revenue up 16% to Rs 19,327.72 crore versus Rs 16,550 crore (Bloomberg estimate: Rs 18,068 crore).
Ebitda up 5% to Rs 6,335.17 crore versus Rs 6,042 crore (Bloomberg estimate: Rs 6,506 crore).
Margin at 32.8% versus 36.9% (Bloomberg estimate: 36%).
Net profit up 3% to Rs 5,078.34 crore versus Rs 4,927 crore (Bloomberg estimate: Rs 5,154 crore).
Revenue increased by 16% year-on-year to Rs 19,327.72 crore, compared to Rs 16,550 crore in the same quarter last year. That included a 6.79% increase in cigarette revenue, which rose to Rs 8,177 crore from Rs 7,657 crore a year ago. Revenue from FMCG excluding cigarettes increased by 5.4% to Rs 5,577 crore from Rs 5,291 crore in the corresponding period last year. The Bloomberg poll of analysts had pegged the top line at Rs 18,068 crore.
Segment-Wise Revenue (YoY)
Hotels business' revenue rose 12.01% to Rs 727 crore versus Rs 649 crore.
Revenue in agri business rose 47.07% to Rs 5,780 crore versus Rs 3,930 crore.
Revenue from paperboards, paper and packaging rose 2.17% Rs 2,114 crore versus Rs 2,069 crore.
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