ITC Q2 Results: Profit Up 6.1% At Rs 4,955.9 Crore

ITC Ltd.'s second quarter profit rose while its margin came in lower than estimated on account of sustained input cost inflation.

The consolidated profit of India’s largest cigarette maker increased 6.11% to Rs 4,955.9 crore in the quarter ended September, according to an exchange filing on Thursday. That compares with the Rs 4,973.93 crore consensus estimate of analysts tracked by Bloomberg.

ITC Q2 FY24 Highlights (Consolidated, YoY)

• Revenue up 3.5% at Rs 17,774.45 crore, against an estimate of Rs 17,589.24 crore.

• Ebitda up 3.11% to Rs 6,454.24 crore vs Rs 6,259.1 crore. Analysts had forecast it at Rs 6,558.42 crore.

• Margin at 36.3% versus 36.6%, as against an estimate of 37.3%.

The quarterly revenue was dragged down by agricultural and paperboard businesses. Export restrictions on rice and wheat curbed agri business growth, while the performance of the paperboards, paper and packaging segment reflect the impact of low-priced Chinese supplies and muted demand in export markets.

Sharp reduction in global pulp prices and high base effect also impacted growth. The domestic demand was also relatively subdued in certain discretionary categories during the quarter.

Among other segments, the cigarettes business continued to gain volume as it countered illicit trade and reinforced market standing by fortifying the product portfolio through innovation, democratising premiumisation across segments and enhancing product availability backed by superior on-ground execution, ITC said in a statement. Analysts peg the cigarette segment's volume growth at 5% during the quarter under review.

The company said a sharp escalation in costs of leaf tobacco and certain other inputs along with increase in taxes were largely mitigated through improved mix, strategic cost management and calibrated pricing.

As for the other-FMCG segment, ITC said categories like atta, spices, personal wash and incense sticks drove growth amid relatively subdued consumer demand environment. However, certain categories such as biscuits, snacks, noodles and popular soaps witnessed increasing competitive intensity, including from regional players in the backdrop of commodity price deflationary conditions.

While commodity prices declined on a year-on-year basis, the overall input cost table remains elevated as compared with pre-pandemic levels, said ITC.

A few commodities such as wheat, maida, sugar, potato, etc., witnessed sequential uptick in prices during the quarter, it said.

The company also said that green shoots of recovery are visible, with prospects of improved agriculture output, onset of the festive season, increase in rural wages and government spending on infrastructure auguring well for a recovery in rural markets.

ITC said it remains focused on driving profitability improvement through multi-pronged interventions—premiumisation, supply chain optimisation, digital interventions across the value chain, strategic cost management and judicious pricing action.

Segmental Revenue Q2 FY24 (YoY, Consolidated)

• FMCG-Cigarettes business grew 9.07% to Rs 8,328.21 crore.

• FMCG-Others business rose 8.35% to Rs 5,303.25 crore.

• Hotels segment rose 20.45% to Rs 675 crore.

• Agri business fell 1.26% to Rs 3,987.79 crore. Excluding wheat and rice exports, the standalone revenue rose 26.4%.

• Paperboards, paper and packaging business fell 9.5% to Rs 2,069.88 crore.

• Others grew 13.84% to Rs 912.71 crore.

This was the first quarter since ITC Hotels was demerged in August.

The company said that the scheme of demerger approved by the board was progressing as per scheduled timelines.

Global growth and external trade, crude price movement, and private capex pick-up will be key monitorables, it said, while highlighting "uncertainty" in consumer demand.

(Corrects an earlier version which misstated the revenue figure)