ITC Q4 results: Double-digit rise in profit, 6-7% growth in volume likely

NEW DELHI: ITC is likely to report a double-digit rise in net profit for the March quarter on 6-7 per cent YoY rise in volume.

Analysts noted that the cigarette maker has been taking price increases in lower length cigarettes since October 2018, which should aid numbers. Operating margin of FMCG business, recovery in paper business, outlook on agri and hotel businesses and growth in cigarette volumes will be keenly watched.

IIFL Institutional Equities is expecting the FMCG major to report a volume growth of 6 per cent, on a favourable base of 2 per cent volume decline.


“Since there have been no increases in the specific cess in the past year, net sales growth would stand at 10.6 per cent and cigarette Ebit growth at 11 per cent. We expect growth in ‘FMCG – Others’ to slow down to 10 per cent from 11.5 per cent in the previous quarter. Overall net sales and Ebit may grow 13 per cent each, whereas net profit growth is expected at 10.4 per cent,” the brokerage said.

HDFC Institutional Reserach, which sees adjusted profit growth for the firm at 9.6 per cent YoY, sees cigarette revenue growth of 9 per cent YoY, with 7 per cent volume growth YoY. It expects non-cigarette businesses to grow at 13.5 per cent with FMCG, hotel, agri and paper businesses registering growth of 12 per cent, 13 per cent, 16 per cent and 14 per cent, respectively.

Restructuring in retail business will have an impact on FMCG growth but is favourable for EBIT margin, the brokerage said.

FMCG Ebit margin is seen at 3.5 per cent against 3 per cent in the year-ago quarter. Overall Ebitda margin to dip by 46 bps to 37.9 per cent due to unfavorable base.