ITC Q2 Results Review - Resilient Print Despite Challenges; Retain 'Buy': Motilal Oswal

Motilal Oswal Report

ITC Ltd. delivered consolidated revenue growth of 17% YoY (beat) in Q2 FY25, due to high growth in agri business. Core business performance was largely in line with estimates despite several challenges.

Gross cigarette revenue grew by 7%, driven by volume growth of ~3.5% YoY (in line), pricing growth of 1-2% and better mix. Premium cigarette segment continued to outperform. Ebit growth was 5% YoY (in line).  FMCG segment delivered 5% revenue growth (7% growth excl. notebook business) in a challenging environment.

ITC witnessed healthy demand from both urban and rural markets. Excessive rains in parts of the country also impacted a part of the portfolio.

Notebooks impacted by a high base effect and local competition on a sharp drop in paper prices.

Margins were impacted slightly by rising competitive pressure (local, regional players), increased commodity prices and weak demand. Ebit margin was at 8.0%. (estimate: 8.2%).

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