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Business News/ Companies / Company Results/  ITC beats estimates on profit, revenues

ITC beats estimates on profit, revenues

ITC’s board recommended an interim dividend of ₹6.25 per share for the fiscal year ending 31 March 2024.

ITC declares dividend of ₹6.25 per share (REUTERS)Premium
ITC declares dividend of 6.25 per share (REUTERS)

NEW DELHI : ITC Ltd beat Street expectations with a 10.75% rise in December quarter standalone net profit, as the company initiated tactical cost management and calibrated pricing actions across its cigarettes and FMCG portfolio.

Net profit at the maker of Gold Flake cigarettes and Bingo chips rose to 5,572.07 crore in the three months ended 31 December from 5,031.01 crore a year earlier. Profit topped the 5,192 crore estimate in a Bloomberg survey of 18 analysts.

Revenue from operations grew 2.23% to 17,651.85 crore from 17,265.48 crore a year earlier. Revenue, too, exceeded Street estimates of 17,132 crore.

At the same time, expenses jumped 5.2% to 12,056.69 crore year-on-year (y-o-y), while Ebitda (earnings before interest, taxes, depreciation and amortization) dipped 3.2% to 6,024 crore.

The company saw a credit of 468.44 crore in the current tax expense for the quarter and nine months ended 31 December, 2023 on account of provisions relating to uncertain tax positions for earlier year, it said.

The company reported subdued demand for cigarettes while also reporting a sharp escalation in leaf tobacco prices.

Meanwhile, revenues for fast-moving consumer goods as well as hotels reported strong growth during the quarter.

Improving farm terms of trade, good recovery in winter crop sowing, and higher government spending augur well for a pick-up in rural demand going forward, the company said in a statement Monday. It also highlighted agri-commodity inflation as a key monitorable going forward.

“India remains a bright spot amidst a slowing global economy with real GDP growing by an impressive 7.6% y-o-y in Q2 FY24. This was driven by multi-dimensional and purposeful policy interventions by the government of India with particular focus on infrastructure creation, which, inter alia, reflected in the strong growth of 11% y-o-y in fixed investments. Private consumption, on the other hand, remained muted (especially in the value segment and rural markets), growing by only 3.1% y-o-y—well below the long-term average of about 7% per annum. Amidst a challenging macro-economic and operating environment as stated above, and high base effect in some of its operating segments, the company delivered resilient performance during the quarter," ITC said.

ITC’s revenue from cigarette business rose 3.5% from a year ago to 7,548.75 crore. Cigarette volumes dipped by 2% y-o-y, said analysts on account of a high base quarter, but improved sequentially, said analysts.

“Cigarettes segment witnessed consolidation on a high base after a period of sustained growth momentum," the company said.

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, it added.

Other businesses in FMCG, including packaged food and personal care products, posted 7.5% rise in revenue to 5,209.05 crore y-o-y; however, revenues declined 1.5% sequentially. Segment Ebitda margins expanded 100 basis points y-o-y to 11%. “The FMCG businesses delivered resilient performance amidst slowdown in consumer demand; staples, dairy, beverages, fragrances, personal wash, homecare, agarbattis, classmate notebooks and pens drive growth. Growth in both traditional and emerging channels continued to be driven by sharp execution of channel-specific business plans, collaborations, format-based assortments and category-specific sell-out strategies," ITC said.

The company also faced headwinds in commodity prices—especially on wheat, maida, and sugar that witnessed a sequential uptick in prices. “The businesses continue to drive profitability improvement through multi-pronged interventions viz. premiumisation, supply chain optimisation, digital initiatives across the value chain, strategic cost management and judicious pricing actions," the company added.

Meanwhile, the agriculture business saw a 2.2% dip in December quarter revenue to 3,054.74 crore. “The operating environment remained challenging due to various policy interventions of the Government of India to ensure food security and control inflation which limited business opportunities for the agri business," it added.

The hotels segment continued to perform well. Segment revenue surged nearly 18.2% to 842.03 crore year-on-year on the back of the World Cup last quarter as well as greater conferences and exhibitions.

Ahead of the earnings, ITC shares were down 1.2% at 450 a piece on a day the benchmark Sensex rose 1.76% to 71,941.57.

On Monday the company’s board recommended an interim dividend of 6.25 per share for the financial year ending 31 March, 2024.

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Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Published: 29 Jan 2024, 06:55 PM IST
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