ITC Q4 Results Today: Cigarettes, FMCG biz revenue growth likely, PAT; Check key factors here

ITC Ltd is set to announce its fourth-quarter earnings for FY23 on May 18th. Apart from the results, the company's board of directors will also consider and recommend a final dividend for the fiscal year 2022-23. The FMCG player's stock price will be accordingly in focus. In Q4FY23, cigarette and FMCG business may post double-digit growth in revenues, while post-Covid pent-up demand is likely to drive hotel business. Agri business may see a drop in sales.

In its regulatory filing, earlier this month, ITC said, a Meeting of the Board of Directors of the company has been convened for Thursday, 18th May, 2023, inter alia, to:

- consider and approve the audited standalone and consolidated financial results for the quarter and twelve months ended March 31, 2023 period.

- consider and recommend a final dividend for FY23.

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What to expect in ITC's Q4 earnings?

In its preview note, ICICI Direct Research said, "We estimate 6.3% revenue growth for ITC led by strong 15.9% growth in cigarettes business. we estimate ~13% volume growth in cigarettes. Moreover, the FMCG business is expected to see 19.1% sales growth led by strong traction in foods, discretionary & stationary categories. Hotels segment is estimated to grow 77.8% led by post-covid pent-up demand. The growth in the paperboard segment is expected to moderate given RM prices have declined & companies are taking price cuts accordingly. The segment is likely to grow 7.6% in Q4. Agri business is likely to see 25.4% sales decline on account of export restriction on wheat."

Further, the brokerage's note said, "We expect 340 bps gross margin improvement & similar expansion in operating margins to 35.3%. Net profit is expected to grow 17.2% to ₹4,911.8 crore."

Meanwhile, Axis Securities expect ITC's cigratte business to grow 16% YoY (13% volume), FMCG to grow at 14% (mid volume growth) primarily led by price growth, hotels (continued strong momentum), papers (recovery) and agri to decline on high base.

Also, EBITDA Margins are expected to expand 450bps on account of GM expansion, better mix, operating leverage, and cost savings.

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Further, Sharekhan has factored a 13% YoY growth in ITC's cigarette business aided by 10-11% volume growth, while non-cigarette FMCG business is expected to grow by 19% y-o-y. Hotel business is expected to grow by 70% y-o-y aided by sustained strong demand. Paper business is expected to grow by 15% y-o-y, while Agri business is likely to decline by 30% y-o-y.

Additionally, Sharekhan's note said, "Gross margin and OPM are likely to improve by 335 bps and ~320 bps y-o-y aided by softening of raw material prices and better operating efficiencies," adding, "in-line with 14% y-o-y growth in operating profit, PAT is expected to grow by 14% y-o-y."

Among key factors to watch as per Axis Securities are --- ITC's - demand outlook on rural vs urban, competitive intensity; RM trends, Hotels and Agri business outlook.

Overall, ICICI Direct has expected ITC's revenue to be at ₹17,459.1 crore in Q4FY23, up by 6.3% YoY and 1.1% QoQ. EBITDA is likely to be at ₹6,157.4 crore, higher by 17.9% YoY but lower by 1.1% QoQ. Similarly, PAT is factored to come around ₹4,911.8 crore up by 17.2% YoY but down 2.4% sequentially.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.