ITC Q1 Results Review - Demand Outlook Positive, Margins Bottomed Out: Prabhudas Lilladher

Prabhudas Lilladher Report

ITC Ltd.'s Ebitda grew by 0.7% as margins across paperboard and agri dragged overall performance despite 7% cigarette Ebit growth. FMCG business suffered as low paper prices resulted in local competition in Stationary business while heat wave affected sales of juices, instant noodles and snacks.

Demand scenario remains positive with expected recovery in demand for both cigarettes and FMCG.

We expect ~4% cigarette volume growth in FY25/26 in a steady state given stable taxation and sustained innovations and distribution led gains.

Although hotels have, a high, base, expect better performance in balance year due to sustained demand. We believe paper margins have bottomed out and expect recovery to set in from H2.

Agri business margins will expand in H2 FY25 only as higher leaf tobacco get absorbed in the product prices.

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