ITC net profit rises 11% in Q3, exceeds street expectations

Kolkata: ITC on Monday beat Street expectations with a 11% rise in fiscal third quarter net profit propelled by fast-moving consumer goods (FMCG) and a thriving hotel business. Profit was also boosted by higher other income and lower tax expense during the period. Profit climbed to ₹5,572 crore in the quarter ended December 31. Gross revenue also surpassed analysts' estimates, growing about 2.1% to ₹17,483 crore.

ITC said the company delivered resilient performance in the quarter despite a challenging macro-economic and operating environment, and high base effect in some of its operating segments including the flagship cigarette business. This was helped by the hotel businesses reporting its best-ever profits and revenues.

Premiumisation has been a consistent trend for both cigarette and FMCG businesses, the company said. The flagship cigarette business, where ITC accounts for every three out of every four cigarettes sold legally in India, reported 2.3% year-on-year rise in net segment revenue at ₹7,548.7 crore and profit before interest and taxes (PBIT) of ₹4,728 crore. The company attributed the subdued sales to consolidation on a high base after a period of sustained growth momentum.

Nuvama Institutional Equities said ITC's cigarette volume dipped by 2% year-on-year in Q3FY24.

ITC said there was "resilient performance" in the FMCG business despite "subdued demand condition" with staples, dairy, beverages, fragrances, personal wash, homecare, agarbattis and notebooks driving growth. The segment revenue rose 7.6% year-on-year to ₹5,209 crore, while the Ebitda or earnings before interest, tax, depreciation and amortisation margin expanded 100 basis points to 11% at ₹571.6 crore.

ITC's hotel business saw segment revenue jump 18% to ₹842 crore in Q3, while segment PBIT increased by 57% to ₹229.66 crore. The Ebitda margin went up 4.70 percentage points to 36.2%. The company said there was strong growth in average room rates and occupancies across properties driven by retail, MICE and the Cricket World Cup. The proposed demerger of ITC's hotel business has received no-objection from the stock exchanges, it said.

Meanwhile, the agri-business was impacted by trade restrictions on agri-commodities with revenue declining by 2.2% to ₹3,054.7 crore. ITC said excluding commodities like wheat and rice, where there are export restrictions, revenue rose 14% in the quarter.

The company also said that the paperboard, paper and packaging segment remained impacted by low-priced Chinese supplies in global markets, muted domestic demand, surge in wood cost, and high-base effect. The business segment revenue fell by 9.7% to ₹2,080.9 crore. ITC board has approved an interim dividend of ₹6.25 per share for the current fiscal.