ITC Q1 results: Profit may rise 10-14%; volume may moderate to 5-6%

ITC may report a price hike-led 10-14 per cent rise in year-on-year (YoY) profit for the June quarter even as volume growth coming in at 3-5 per cent due to higher base-year effect. The management commentary on cigarette volume growth, FMCG business margin, recovery in paper business and outlook on agri and hotel businesses will be keenly watched.

The FMCG major will release its results later today.

IIFL Institutional Equities expects the cigarette maker to report a volume growth of 5.5 per cent against 7.5 per cent in the previous quarter.


“Since October 2018, ITC has been taking price increases in the lower length cigarettes category. We forecast cigarette sales growth of 11 per cent. Liquidity issues in the channel and a slowdown in rural demand would result in subdued sales growth in the FMCG business at 9 per cent,” the brokerage said.

Higher cost leaf tobacco and imported capsule filters should limit the operating leverage benefits in cigarettes, the brokerage said while anticipating Ebitda growth of 11 per cent and PAT growth of 14 per cent for the firm.

IDFC Securities expects a 3 per cent volume growth for the cigarette maker, which coupled with price hikes and moderating costs could cause cigarette Ebit to grow at 8 per cent YoY in June quarter. This brokerage sees profit rising 11 YoY per cent to Rs 3,127.90 crore and sales 9.6 per cent to Rs 10,874.60 crore.

HDFC Securities, meanwhile, believes that the restructuring in ITC’s retail business will have an impact on FMCG growth, but it is favourable for Ebit margin.