ITC Q4 Results Review - Steady Core Business Performance: Motilal Oswal

Motilal Oswal Report

ITC Ltd.'s cigarette and FMCG performance was healthy, while the nonconsumer business (paper and agribusiness) remained weak. Consolidated revenue grew 2% YoY (estimate: +4.5%). The cigarette revenue increased 7.5% YoY, with volume growth of ~2% YoY (in line), price hikes of 3-4%, and remaining through mix improvement. The premium cigarette segment continued to outperform, while the value segment remained weak.

The FMCG segment’s performance was resilient, with 7% YoY revenue growth. Digital and modern trade businesses contributed significantly, comprising 31% of revenue. Despite mounting competitive pressure (from local and regional players) and weak demand, ITC reported an Ebit margin expansion on an LTL basis (adjusting for the PLI benefit in base). The Ebit margin stood at 9% during the quarter.

The paper business was hit by demand issues, competition from China, lower pulp prices, and higher input costs. Both revenue and margin were weak; however, a gradual recovery is likely in FY25.

Agribusiness continued to see a contraction in FY24, due to trade restrictions on agri-commodities. Hotels posted a robust performance, with strong ARR and occupancy.

Reiterate Buy with an SOTP-based target price of Rs 515 (based on 28 times FY26E P/E).

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