ITC Q1 FY 25 Results, Net Profit Rises Marginally, Revenue Up 7% YoY

ITC, the second-largest FMCG company in India and the third-largest tobacco company globally, reported a marginal profit in Q1 FY25. The company operates across six segments: FMCG, hotels, agribusiness, information technology, paper products, and packaging, with the majority of its revenue coming from tobacco products. ITC employs 37312 people at over 60 locations in India, and its products are available in 6 million retail outlets nationwide and exported to 90 countries. Despite facing challenges in the current market landscape, including increased regulatory scrutiny and evolving consumer preferences, ITC has been strategically diversifying its portfolio to mitigate risks and enhance growth prospects. The FMCG segment, which includes categories such as packaged foods, personal care, and lifestyle products, has shown promising potential, contributing to overall revenue growth.

ITC Q1 FY25 Result:

ITC’s standalone revenue for the quarter was Rs 18,219.74 crore, an increase of 7.32% from Rs 16,995.49 crore in the same quarter last year.ITC reported a 0.3% year-on-year (YoY) increase in standalone net profit, totaling Rs 4,917.45 crore for the quarter ended on June, up from Rs 4,902.74 crore last year. Standalone revenue from operations reached Rs 18,077.24 crore, a 7.32% rise from Rs 16,842.93 crore in the same quarter last year. Analysts had anticipated a 2-6% YoY profit increase with a 6-7% sales jump.Gross Revenue increased by 7.3% YoY despite a challenging environment, primarily driven by Hotels, Value Added Agri products, and Leaf Tobacco.

FMCG – Others and Cigarettes showed resilient performance amid subdued demand. Although there were some signs of demand recovery in the Paperboards, Paper & Packaging segment during the quarter, performance was largely hindered by cheap Chinese imports in international markets, including India, and a rise in domestic wood prices noted by ITC.ITC reported a consolidated profit decline of 0.26% year-on-year (YoY), totaling Rs 5,091.59 crore for the June quarter, down from Rs 5,104.90 crore a year ago. However, revenue from operations increased by 7.45% year-on-year to Rs 20,029.60 crore, up from Rs 18,639.48 crore in the same quarter last year.

FMCG businesses Marginal improvement:

ITC reported that its FMCG businesses performed resiliently despite subdued demand, with segment revenue increasing 6.3% year-on-year (YoY) to Rs 5,491 crore. The segment’s EBITDA margins rose by 25 basis points YoY to 11.3%.

Cigarette revenues jump directly 7%:

In the cigarette division, net segment revenue grew by 7%, while PBIT increased by 6.5% year-on-year. The division continued to address illicit trade and strengthen its market position by innovating its product portfolio and promoting premiumization, backed by effective execution, as highlighted by ITC.

Demerger update for Hotel:

In the hotel segment, revenue increased by 10.9% year-over-year, with PBIT (Profit Before Interest and Taxes) rising 11.5% year-over-year due to robust growth across properties, despite fewer wedding dates and an extreme heatwave affecting domestic travel and dining out. ITC announced that shareholders approved the plan on June 6, and a petition for sanction was submitted to the NCLT on July 22.

Paperboard revenue is less:

Agri business revenues rose 22.2%, fueled by value-added agri products, leaf tobacco, and wheat. In contrast, the Paperboards, Paper & Packaging segment experienced a 6.8% YoY decline due to low-priced Chinese supplies in global markets, weak domestic demand, and a significant rise in domestic wood costs.

ITC stock price decline:

ITC stock price is currently at Rs. 489.85 per share, reflecting a nearly 1% decline due to modest growth in Q1 FY25 results.

Conclusion: ITC is increasingly investing in the hotel industry, and all sectors are gradually becoming profitable, which is beneficial for the company’s long-term success.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.