BackITC Q1 Results: Net profit likely to rise 16%, revenue may remain flat YoY; Cigarette volume growth to be steady
ITC Q1 net profit is expected to rise 16.7% on-year to ₹4,886 crore led by steady growth in cigarette and fast-moving consumer goods (FMCG) businesses, as per brokerage poll by Liemint.
PremiumITC Ltd, the diversified conglomerate, is set to declare its Q1 results today. The cigarette manufacturer is expected to see decent double digit growth in the net profit for the first quarter of FY24, while its revenue is likely to remain flat on a year-on-year (YoY) basis.
ITC Q1 net profit is expected to rise 16.7% on-year to ₹4,886 crore led by steady growth in cigarette and fast-moving consumer goods (FMCG) businesses, as per brokerage poll by Livemint.
The company’s topline growth in Q1FY24 is likely to remain muted at 1.5% with the company reporting revenue at ₹17,548 crore, according to the average analysts’ estimates.
ITC’s cigarette business is likely to deliver volume growth of around 10% and see market share gains in the absence of competition from illicit trade.
The FMCG - Others segment has also delivered strong growth across markets and product lines, and as input prices decline, and analysts anticipate an expansion in margins too.
Meanwhile, paperboards, paper, and packaging are expected to remain flattish on a YoY basis.
Motilal Oswal Financial Services expects gross margin and EBITDA margin to expand 720 bps and 460 bps YoY, respectively, on a weak base.
Going ahead, ITC’s outlook on the agri, paper & packaging and Hotel businesses will remain a key monitorable, while outlooks on Cigarettes and other FMCG demand will also be watched out for.
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HDFC Securities models 12% YoY growth in cigarette revenue, with volume growth of 10% YoY (4% 4-year CAGR). The non-cigarette business is expected to fall 9% YoY (impacted by agribusiness). The brokerage models 14% YoY growth in FMCG.
“We expect cigarette EBIT to grow by 13% YoY. We model FMCG EBIT margin at 8% versus 4.6% YoY. EBITDA to grow by 11% YoY," HDFC Securities said.
Yes Securities expects ITC’s overall topline to be down by 2.3% YoY even while it expects 13.5% YoY revenue growth in cigarette business led by a volume growth of 11% YoY.
“Other-FMCG business is expected to grow at ~16% YoY. While decline in Agri Business (sitting on high base) and subdued PPP will drag ITC’s overall revenue growth on a YoY basis. At the company level, we expect EBITDA margin to expand ~430 bps YoY to 37% led by gross margin improvement," Yes Securities said.
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