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Photo: Reuters
Photo: Reuters

ITC net profit plunges 11.5%; beats estimates

Agri products and FMCG-others biz grew, while hotels biz disappointed


Cigarette-to-hotel conglomerate ITC Ltd on Thursday posted a 11.5% year-on-year (y-o-y) drop in standalone net profit in the December quarter though the figure came slightly ahead of street expectations at 3,662.85 crore. A Bloomberg poll of 17 analysts had forecast a net profit of 3,613.50 crore, while 14 analysts estimated standalone revenue of 11,935.80 crore.

The maker of Aashirvaad wheat flour and Savlon soaps recorded a 4.7% y-o-y rise in standalone revenue to 12,580.40 crore in the quarter, because of the growth in its agricultural products business and moderate growth in the FMCG-others segment comprising packaged food and personal care brands.

ITC’s cigarette business saw a further recovery in the December quarter, while its soap and hand sanitizer brand Savlon clocked 1,000 crore in consumer spending in 2020. Revenue from the hotels business, one of the worst-hit sectors, plunged 57% from a year ago to 552.31 crore.

“ITC’s Q2FY21 results were in line with our estimate on the revenue front but below our estimates on the margin and earnings front," analysts at ICICI Direct Research said in a note.

For the quarter ended December, revenue from cigarettes grew 3.5% from a year earlier to 5,498.43 crore. “Volumes and revenue witnessed strong sequential recovery led by metros on the back of progressive easing of restrictions and enhanced mobility," the company said. Cigarette volumes have still not recovered fully given the prevalent work from home culture and restricted outdoor activities, analysts at ICICI Direct said.

Revenue from the FMCG-others segment comprising brands such as Sunfeast biscuits and Savlon soaps rose 7.5% during the quarter to 3,561.83 crore. The segment saw demand moderate as markets opened and consumers reduced purchase of essentials compared to last year when the strict curbs led people to stock up.

Ebitda or earnings before interest, tax, depreciation and amortization in the FMCG-others segment grew 28% to 326 crore in the last quarter with margins expanding by 150 basis points y-o-y to 9.2%. This was driven by higher operating leverage, enhanced operational efficiencies, portfolio premiumization, and product mix enrichment, ITC said. The company said it launched more than 100 products in last nine months in hygiene, health, and wellness, naturals and convenience categories

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