ITC Ltd recorded a resilient revenue growth ahead of estimates, with stable performance across segments, led by Agri Business and Hotels and in-line performance in Cigarettes and FMCG categories. With the conglomerate posting a stable cigarette volumes growth trajectory at around 3 per cent despite calibrated price hikes to navigate cost inflation, and a lower EBIT growth of 5 per cent, brokerage firms remained focused on the category. Amnish Aggarwal, Director – Research – Institutional Equities, PL Capital – Prabhudas Lilladher, said, “Cigarette volumes grew by around 3.3 per cent as ITC continued to invest behind brands and go to market initiatives. We remain optimistic on cigarette demand and expect further increase in volume growth; margins are unlikely to improve due to higher leaf tobacco prices.”
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ICICI Securities said, “ITC’s Q2FY25 exhibited a resilient revenue growth performance with a stable performance across segments with cigarette volumes growth trajectory stable at around 3 per cent YoY, despite calibrated price hikes to navigate cost inflation. Importantly, unchanged taxation on cigarettes will likely sustain market share gain trajectory from illicit industry (~25 per cent of overall cigarette industry). Formal cigarette industry continues to have tailwinds of: 1) stability in taxes and 2) deterrent action by enforcement agencies. We expect the formal industry to drive volume growth (from peak levels) if these tailwinds sustain. Margins were under pressure due to commodity inflation across business segments and inferior mix (higher share of agri business).” ITC’s cigarette segment reported net revenue growth of 7.3 per cent YoY with differentiated and premium offerings continuing to perform well.
ITC had released its fiscal second quarter earnings yesterday with profit growth of 1.9 per cent YoY to Rs 992.87 crore. Revenue was recorded at Rs 22,281.89 crore, up 15.6 per cent as against Rs 19,270.02 crore during the same period of previous financial year, driven by Agri Business and Hotels. Axis Securities said that ITC delivered strong revenue growth driven by impressive performance in the Agribusiness (up 47 per cent YoY) and the hotel segment (up 12.1 per cent YoY). The Cigarette business grew 7.3 per cent YoY with 2-3 per cent volume growth, in line with estimates, while the FMCG business reported slower growth of 5.4 per cent YoY due to a broad-based slowdown in the FMCG sector.
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