ITC Q3 net seen up 5%, cigarette volumes may decline moderately

ITC is expected to see another quiet quarter with a positive trigger in top-line growth in October-December period. The FMCG major is likely to post net profit at Rs 2771 crore in Q3 from Rs 2635 crore in corresponding quarter last fiscal. According to a CNBC-TV18 poll, revenue may grow 6.4 percent to Rs 9516 crore against Rs 8943 crore in year-ago period.

EBITDA is seen up 7.5 percent at Rs 3727 crore from Rs 3465 crore while EBITDA margins may come in at 39.2 percent against 38.7 percent (Y-o-Y).

Analysts polled by CNBC-TV18 feel cigarette volumes which contribute 40-45 percent to revenue may decline but more moderately. Cigarette volume is estimated to decline by 5-8 percent and may decline moderately owing to low base. Price hikes of 15-16 percent across categories may hit volume. Regular size filter segment may see high single digit decline and deluxe size filter segment is seen to gain traction. As a whole, the company may see marginal contraction in margins.

Its FMCG business is expected 8-9 percent growth while prudent costs controls may aide margins. Sunfeast products may face pressure from competitors like Patanjali and Nestle. ITC's FMCG unit may see raw material benefits from lower commodity costs and scale benefits.