Moneycontrol Bureau
Cigarettes-to-hotels-FMCG major ITC started off financial year 2016-17 with profit growth of a 10 percent at Rs 2,384.7 crore in April-June quarter compared with Rs 2,166 crore in same period last fiscal.
The company adjusted its profit numbers as per new accounting standards. As per old accounting standards, profit figure was Rs 2,495.20 crore in Q1FY16 against Rs 2,265.44 crore in Q1FY15.
Revenue on standalone basis increased 8.3 percent to Rs 13,253 crore during the quarter from Rs 12,232.65 crore in corresponding period of last fiscal.
Operating profit (EBITDA - earnings before interest, tax, depreciation and amortisation) grew by 8.4 percent to Rs 3,526 crore but margin remained unchanged at 26.6 percent on yearly basis.
The company missed analysts' expectations on profit and operational front. Profit was expected at Rs 2,490.4 crore and operating profit at Rs 3,663.4 crore for the quarter, according to the average of estimates of analysts polled by CNBC-TV18.
Other income for the quarter increased 18 percent year-on-year to Rs 420.52 crore while employee expenses jumped 11.6 percent to Rs 700.3 crore and tax cost was up 9.9 percent at Rs 1,290.73 crore in the quarter ended June 2016.
Segments Performance
ITC said its cigarette business, which comes under FMCG business and contributes 62 percent to total revenue, has registered a 6.4 percent growth in revenue at Rs 8,230.6 crore on yearly basis with the earnings before interest & tax (EBIT) growing 8 percent and margin expansion of 50 basis points.
FMCG (others) revenue, which includes dairy, personal care products, apparel and packaged foods, grew by up 9.5 percent to Rs 2,385.1 crore compared with year-ago period. The segment's EBIT loss narrowed to Rs 4.5 crore from Rs 8 crore in same period.
FMCG and agri businesses' contribution to total revenue stood at 18 percent and 21 percent, respectively.
Agri business revenue increased 20.2 percent year-on-year to Rs 2,794 crore in April-June quarter but EBIT margin contracted by 160 basis points to 8.5 percent.
Revenue from its hotels segment was almost flat at Rs 287.4 crore but EBIT turned positive at Rs 1.2 crore against loss of Rs 7.25 crore on yearly basis.
Paperboards business fell 1.5 percent to Rs 1,323.9 crore with 20 basis points contraction in margin at 18.7 percent in Q1.
Analyzing ITC's first quarter earnings, Ritwik Rai of Kotak Securities expects cigarette volumes to pick up further and sees ITC raising prices in the coming quarters.He said that the cigarette EBIT growth at 8 percent is lower than expected has revised the estimate cigarette EBIT growth to 12.5 percent from 13 percent for FY17.Kotak has revised its price target to Rs 270 per share on ITC.
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