ITC’s Q3 results reveal an 11% increase in net profit to Rs 5,572 crore, along with the announcement of an interim dividend

ITC Ltd posted a standalone net profit of Rs 5,572 crore for the December quarter of FY24, marking an 11% growth from Rs 5,031 crore in the same period last year, surpassing market expectations. Sequentially, the net profit increased by 13% from Rs 4,927 crore in the September quarter.

The company also disclosed a 6.5% rise in its consolidated net profit, reaching Rs 5,400.51 crore for the quarter ending in December. Analysts’ projections, based on a poll of six brokerages, anticipated a net profit of Rs 5,183 crore and revenue of Rs 17,425 crore.

Total revenue from operations witnessed a 2% year-on-year increase at Rs 17,651.85 crore, up from Rs 17,265 crore, as stated in a regulatory filing on January 29. The consolidated revenue saw a 2.4% growth, reaching Rs 19,484.50 crore.

The quarter’s Earnings Before Interest, Tax, Depreciation, and Amortization (EBIDTA) stood at Rs 6,024 crore, experiencing a 3.2 percent decline. The EBIDTA margin was 36.6 percent, dropping by 180 basis points year-on-year. One basis point is equivalent to one-hundredth of a percentage point. The conglomerate, spanning cigarettes to hotels, declared an interim dividend of Rs 6.25 per share for the financial year 2023-2024. The board set the record date for this on February 8.

Performance Breakdown by Segment:

FMCG 

Despite challenging demand conditions, the company demonstrated robust performance in the FMCG – Others segment. Segment revenue witnessed a YoY increase of 7.6%, with a 2-year Compound Annual Growth Rate (CAGR) of 12.8%. Growth was propelled by categories like Staples, Dairy, Beverages, Fragrances, Personal Wash, Homecare, Agarbattis, and Notebooks. The segment’s EBITDA margin saw a YoY expansion of 100 basis points, reaching 11.0%. Additionally, the segment’s Profit Before Interest and Tax (PBIT) increased by 24.1% YoY, according to ITC.

Cigarettes

In the Cigarettes Segment, consolidation took place on a strong foundation after prolonged growth. Net segment revenue and segment PBIT saw a 2.3% YoY increase, with a 2-year Compound Annual Growth Rate (CAGR) of +9.3% for net segment revenue and +9.4% for segment PBIT. The company enhanced its market position through targeted interventions in the portfolio and market, demonstrating agility in execution. Well-received differentiated and premium offerings contributed to this success. The segment also experienced sustained volume recovery from illicit trade, attributed to deterrent actions and tax stability.

Hotels 

The hotels segment had its most successful quarter, recording an 18% YoY increase in segment revenue and a remarkable 57% rise in PBIT. The segment’s EBITDA margin saw a YoY boost of 470 basis points, reaching 36.2%, attributed to higher RevPARs, structural cost adjustments, and improved operating leverage. ITC mentioned that the demerger plan obtained a no-objection from the Stock Exchanges,

Agri Business

The Agri Business segment encountered challenges due to trade restrictions on agri commodities (-2.2% YoY). However, excluding Wheat & Rice, revenue increased by 14.2% YoY. Geopolitical tensions and climate emergencies raised concerns about global food security and inflation, leading to trade restrictions.

The company is collaborating with farmers to enhance resilience in agrarian practices, implementing a Climate Smart Agriculture program covering over 23 lakh acres and around 7.5 lakh farmers. Additionally, a state-of-the-art facility for manufacturing and exporting Nicotine and Nicotine derivative products has been commissioned, as stated in a press release.

Paperboards, Paper, and Packaging

The Paperboards, Paper, and Packaging segment faced challenges from affordable Chinese supplies, sluggish domestic demand, rising wood costs, and a high base effect. Global demand remained subdued, and domestic demand recovery slowed after the festive season.

Despite these obstacles, ITC mentioned that its integrated business model, Industry 4.0 initiatives, strategic investments, and proactive capacity augmentation played a role in partially alleviating pressure on margins.

The company set a production record for in-house chemical pulp and steadily increased the capacity utilization of the Nadiad packaging and printing unit in Gujarat. They also mentioned the upcoming commissioning of a premium Moulded Fibre Products manufacturing facility.

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