ITC Q2 Preview: Cigarette volumes may grow 3%, paperboard arm to pressure margins

Analysts will closely monitor demand in metro areas compared to the rural outlook, along with the competitive intensity.

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26 Aug, 2025 12:21

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Diversified hotels-to-cigarettes conglomerate ITC will report its earnings for the second quarter of the current fiscal year on October 24, 2024. The FMCG player is likely to report the highest revenue among all its listed peers.

According to a Moneycontrol poll of eight brokerages, ITC is likely to report revenue of Rs 17,986 crore, rising 8.7 percent year-on-year compared to Rs 16,550 crore in the July to September quarter of FY24.

Net profit is likely to come in at Rs 5,107 crore in Q2FY25 as against Rs 4,927 crore in the year-ago period, a growth of 3.7 percent.

Earnings estimates of analysts polled by Moneycontrol are in a narrow range, so any positive or negative surprises may elicit a sharp reaction in the stock. The most optimistic estimate sees ITC’s net profit jumping over 6.6 percent year-on-year.

What factors are impacting the earnings?

ITC’s FMCG and hotels segments are expected to perform well, but agri and paper arms could be a drag, noted brokerages.

Cigarettes: For the quarter ended September, cigarette volumes are likely to rise around 3 percent, according to most brokerages. The revenue for tobacco segment might see a six to seven percent jump on-year. Business was slightly impacted in South India market due to floods in Andhra Pradesh, Telangana and Kerala. ITC is also seeing fierce competition from competition, noted Philip Capital.

Segmental performance: The FMCG segment will likely see muted demand as a result of higher inflation and slipping out-of-home consumption. The paperboards segment will remain weak, as the slowdown continues. However, the agriculture segment and hotel business performed well during the quarter, noted brokerages.

Margins: The EBITDA margin is expected to decline year-on-year on account of subdued performance paperboard business. Additionally, due to some inflation in leaf tobacco and other inputs, the EBIT margin of the cigarette segment could see some pressure, even though this was partly mitigated through improved mix, cost management and calibrated pricing.

What to look out for in the quarterly show?

Analysts will closely monitor demand in metro areas compared to the rural outlook, along with the competitive intensity. Additionally, the Street will be closely watching for any further updates on the Hotels business spin-off, along with the agribusiness outlook.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.