ITC Q1 Results: Profit Rises 5% Amid Cost Pressures
ITC's net profit rose 5% sequentially to Rs 4,389.8 crore in the quarter ended June.
ITC Ltd.’s quarterly profit rose beating estimates, fuelled by a pick-up in consumption across segments even as cost pressures persisted.
Net profit attributable to the owner of the consumer goods company—also India’s largest cigarette maker—rose 5% sequentially to Rs 4,389.8 crore in the quarter ended June, according to its exchange filing.
That compares with the Rs 3,974-crore consensus estimate of analysts tracked by Bloomberg.
On a year-on-year basis, the cigarettes-to-hotels conglomerate saw its consolidated net profit jump 33.9% to Rs 4,389.76 crore, aided by a low base because of the disruptions caused by the Covid-19 pandemic.
The owner of the Aashirvaad brand saw its revenue increase 12% over the previous quarter to Rs 19,831.3 crore, against the forecast of Rs 11,760.7 crore.
ITC Q1 FY23 Highlights (QoQ)
Operating profit rose 9% to Rs 6,077.2 crore. Analysts had pegged it at Rs 5,302.2 crore.
Cigarette revenue rose 4% to Rs 7,464.1 crore.
Revenue of the remaining fast-moving consumer goods business rose 7.5% to Rs 4,458.7 crore. Hygiene portfolio sales remained subdued while being higher than pre-pandemic levels.
Sharp rebound in hotels with revenue rising 42.5% to Rs 580.7 crore and average room rates surpassing pre-pandemic levels.
Farm business revenue rose 71.2% to Rs 7,492.1 crore driven by wheat, rice and leaf tobacco exports.
Paperboards, paper and packaging segment revenue increased 3.8% to Rs 2,267.2 crore.
The margin stood at 30.6% against 31.5%. It comes on the back of a 13.5% jump in the cost of materials consumed during the quarter.
E-commerce sales were at nearly 4.2 times of pre-Covid-19 levels or first quarter of FY20.
"Economic activity gathered further momentum during the quarter with an uptick in business and consumer sentiments," the company said in a statement.
"However, geopolitical tensions and persistent supply chain disruptions resulted in hardening of commodity prices, exacerbating the unprecedented inflationary conditions prevailing in the economy."
Inflationary headwinds also manifested in subdued consumption expenditure with volumes coming under pressure, particularly in the rural market, the statement said.
According to the company, while inflation remains a key monitorable, the prospects of a favourable monsoon and the recent moderation in prices of key commodities along with proactive interventions by the central government and the Reserve Bank of India augur well for sustained economic recovery and a pick-up in consumption expenditure.
Discretionary and out-of-home categories such as snacks, beverages, confectionery, frozen snacks, fragrances and agarbattis recorded "strong growth", according to the company's presentation.
Among fast-moving consumer goods companies that have announced the June quarter results so far, Hindustan Unilever Ltd. and Nestle India Ltd. have warned that costs will further rise putting pressure on margins. Both the companies have reported lower margins in Q1 versus Q4.
Shares of ITC closed 1.5% higher at Rs 307.55 on the BSE before the results were announced against a 1.06% gain in the benchmark Nifty 50.