ITC Q4 Results: Profit Beats Estimates Driven By Steady FMCG Sales
Agri business continues to drag, hotels revenue doubles on a low base.
ITC Ltd.’s quarterly profit rose, surpassing analyst estimates, aided by its consumer goods and hotel verticals, even as the farm business took a hit.
Net profit attributable to the owner of Aashirvaad and Sunfeast brands—also India’s largest cigarette maker—rose 23% year-on-year to Rs 5,175.48 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 4,731.2 crore consensus estimate of analysts tracked by Bloomberg.
ITC Q4 FY23 Key Highlights (YoY)
Revenue rose 7% to Rs 19,058.29 crore as against an estimate of Rs 16,403.3 crore.
Ebitda up 18% to Rs 6,624 crore, as compared with an estimate of Rs 6,382.47 crore.
Margin at 34.8% vs. 31.5% and an estimate of 38.9%.
Revenue from fast-moving consumer goods businesses rose 19.3% to Rs 4,951.17 crore, while Ebit margins stood at 10% for the first time.
Cigarette sales increased 12.6% to Rs 8,082.26 crore. Sequentially, however, the pace of revenue growth slowed from 17.9%. Volumes were estimated to be 12%.
Hotel revenue nearly doubled to Rs 808.72 crore on a low base and stood at 1.7 times of Q4 FY20 or pre-pandemic levels as leisure and business travel picked up.
Agri business saw a decline of 17.5% in sales to Rs 3,607.3 crore.
Paperboard, paper, and packaging sales rose just 1.75% to Rs 2,221 crore. It was impacted because of softening of pulp prices, muted demand mainly in global markets and a relatively higher base.
For the full fiscal, the consumer goods maker posted a 17.35% jump in revenue over the previous year to Rs 76,518.21 crore.
Its net profit stood at Rs 19,191.66 crore, up 25.9% year on year.
"After two years of pandemic-led disruptions, FY23 marked a return to normalcy in operations," the company said in a statement. ITC said its operating environment, in the last three financial years, has been extremely challenging due to disruptions caused by the pandemic, unprecedented inflationary pressures and sluggish demand conditions.
In Q4, the FMCG business posted "strong" growth and margin expansion led by multi-pronged interventions including premiumisation, supply chain agility, judicious pricing actions, digital initiatives, strategic cost management and fiscal incentives, such as the product-linked incentive scheme, ITC said.
Growth was driven by major categories of packaged foods—staples, biscuits, snacks, noodles, and beverages. While ‘Fiama’ and ‘Vivel’ range of Personal Wash products and Engage Fragrances grew well, the hygiene portfolio witnessed moderation in demand, even as it remained ahead of pre-pandemic levels, according to the company.
Input costs, the company said, remain at elevated levels, even as some of the commodities witnessed sequential moderation in prices.
The company continued to claw back volume in cigarettes from illicit trade on the back of deterrent actions by enforcement agencies and stability in taxes, the company said in its investor's presentation on Thursday. The revenue growth was boosted by a 14% jump in its cigarettes business, which houses the Classic and Gold Flake brands, as the tobacco industry avoided raising prices on lower tax hikes in the Union budget.
The company also recommended a special dividend Rs 2.75 per-share in addition to the final dividend of Rs 6.75 per share.
Shares of ITC closed 1.87% lower on the BSE after the results were announced, as compared with a 0.28% decline in the Nifty 50.