ITC Q3 Results: Profit Up 11%, Revenue Growth Slows

ITC Ltd.'s third quarter profit rose, beating analysts' estimates, but the pace of revenue growth slowed on account of weakness in the farm and paper businesses.

The standalone net profit of India’s second largest consumer goods maker increased 11% to Rs 5,572 crore in the quarter ended December, according to an exchange filing on Monday. That compares with the Rs 5,192.2-crore consensus estimate of analysts tracked by Bloomberg.

A tax credit of Rs 468.44 crore and higher other income aided profitability.

The company also incurred a one-time expense aggregating Rs 5.52 crore during the quarter and nine months ended Dec. 31, 2023, in relation to the demerger of the company’s hotels business into ITC Hotels Ltd.

ITC Q3 FY24 Highlights (Standalone, YoY)

• Revenue up 2% at Rs 16,483.3 crore, as against an estimate of Rs 17,132.7 crore.

• Ebitda declines 3.2% to Rs 6,024.3 crore. Analysts had forecast it at Rs 6,446.3 crore.

• Margin at 36.6% versus 38.4%, as against an estimate of 37.6%.

• Other income rose 30.2% to Rs 1,135.34 crore.

ITC's cigarette business, which continues to be the biggest contributor to the overall top line, witnessed consolidation on a high base after a period of sustained growth momentum, according to the company.

Cigarette volume is estimated to have dipped 2% on a high base.

The hotel segment reported record high revenue growth. The Ebitda margin expanded 470 basis points over the previous year to 36.2%, driven by higher revenue per available room, structural cost interventions and operating leverage. The company also said that the stock exchanges have given their 'no-objection' to the demerger scheme for hotels business.

The other-FMCG business delivered resilient performance amid slowdown in consumer demand. Staples, dairy, beverages, fragrances, personal wash, homecare, incense sticks and notebooks drove growth. The Ebitda margin expanded 100 basis points over the previous year to 11%.

The company said that competitive intensity remained high in certain categories, including from local and regional players. On a year-on-year basis, raw material prices remained deflationary but there was sequential uptick in certain commodities including wheat, maida, and sugar.

Trade restrictions on agri commodities impacted the agriculture business, with revenue declining 2.2% over the previous year. Excluding the impact of exports ban on wheat and rice, revenue grew 14.2%, the company said.

The paperboards, paper and packaging segment also remains impacted by low-priced Chinese supplies in global markets, persistent weakness in domestic demand, a surge in wood cost and high base effect. Profit before tax for the segment declined 51.2% to Rs 296 crore in the December quarter.

The board of the company also declared an interim dividend of Rs 6.25 per share for financial year 2024. The board fixed the record date for the same on Feb. 8.

Shares of ITC closed 1.53% lower at Rs 448.7 apiece before the results were announced, as against a 1.85% gain in the benchmark NSE Nifty 50. The stock rose 30% over the last 12 months.

(Corrects an earlier version which misstated the revenue figure)