ITC beats Street with 21% jump in Q2 profit

Net profit at the country’s largest cigarette maker rose to ₹4,466.06 crore in the three months ended 30 September from the ₹3,697.18 crore a year ago. A Bloomberg poll of analysts had forecast a net profit of ₹4,095.60 crore.

The maker of Aashirvaad wheat flour and Savlon soaps recorded standalone revenue of ₹17,159.56 crore in the quarter, up 26.6% from ₹13,553.52 crore in the year-ago period. The company reported revenue growth across verticals.

However, revenue was down from the June quarter.

The company reported earnings before interest, tax, depreciation and amortization (Ebitda) of ₹5,860 crore, up 27% from a year earlier.

The pick-up in festive season linked demand helped offset inflationary headwinds that weighed on consumption expenditure, ITC said in a filing to stock exchanges.

ITC expects a pick-up in consumption expenditure in the second half of the year led by moderation in inflation, coupled with a normal monsoon in most parts of the country, and proactive intervention by the government and the central bank.

The cigarette business recovered further in the September quarter, with revenue growing 23.2% to ₹6,953.80 crore from ₹5641.72 crore a year earlier. Volumes grew, too, in what analysts have termed a “positive surprise”.

“ITC cigarette volumes beat versus ours and street estimates with volume growth of 22% year-on-year,” said Abneesh Roy, executive director, Nuvama Institutional Equities.

The FMCG (non-cigarettes) businesses grew 21% over the year; staples and convenience foods recorded robust growth mainly driven by biscuits, atta and noodles, the company said. In the personal care portfolio, fragrances registered strong growth while the Fiama and Vivel range of personal wash products performed well.

The hygiene segment was subdued while remaining significantly ahead of pre-pandemic levels, it said.

Revenues at the company’s hotels business, a sector that has benefitted from the lifting of restrictions on mobility, jumped 81.8% during the quarter.

“Average room rate and occupancy ahead of pre-pandemic levels driven by retail (packages), leisure, weddings and MICE segments. Domestic business travel continues to witness progressive normalisation; inbound foreign travel has also picked up,” according to the company. Meanwhile, the company’s paperboards, paper and packaging segment revenue was up 25% during the quarter. Revenue for the agriculture business was up 44.0% year-on-year driven by wheat, rice and leaf tobacco exports.