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ITC Q3 results | Profit rises 12.7% YoY to Rs 4,156.20 crore, revenue jumps 32.5%

Unprecedented inflation in commodity prices, increase in energy costs and persistent global supply chain disruptions weighed on the macroeconomic environment, said the company.

February 03, 2022 / 09:59 PM IST
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ITC Ltd, India’s largest cigarette manufacturer and an FMCG major, on February 3 reported a standalone profit after tax (PAT) of Rs 4,156.20 crore for the December quarter, up by 12.7 percent against Rs 3,687.88 crore reported in the year-ago period. It beat the street expectations by ~5 percent.

The fast moving consumer goods company had reported a profit of Rs 3,697.18 crore in the September quarter.

The standalone revenue (excluding excise duty) came in higher by 32.5 percent at Rs 15,862.32 crore, compared to Rs 11,969 crore in the same quarter of the previous year. Revenue in the quarter ending September 2021 stood at Rs 12,533.6 crore. The revenues are higher by ~20 percent compared to consensus estimates.

Economic activity gathered further momentum during the quarter with the decline in Covid caseload intensity.

“Enhanced vaccination coverage coupled with uptick in business and consumer sentiments led to broad-based growth across markets and channels even as leading indicators reflected deceleration in the pace of rural demand recovery”, the company said in its statement on the performance for the quarter. “However, unprecedented inflation in commodity prices, increase in energy costs and persistent global supply chain disruptions weighed on the macroeconomic environment," the company said.

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The company saw a strong demand in cigarette business, the volumes for which reached the pre-COVID level, robust FMCG sales and growth in hotels business as the mobility and occupancy increased.

Segmental Performance

The company witnessed broad based growth across all businesses with Cigarettes, FMCG and Agri-business returning robust year-on-year growth.

FMCG - Cigarettes

The business recovered strongly across regions driven by increase in mobility, improved supply chain and better servicing of the markets.

The net revenue for this business segment increased by 13.6 percent on year to Rs 6,244 crore and EBIT for the businesses was higher by 14.4 percent year on year at Rs 3,951 crore.

FMCG - Others

The company continued its strong focus on the FMCG – others segment which resulted in the revenue growth of 9.3 percent on-year to Rs 4,091 crore. This growth is considerable since it came on a relatively high base of last year. Compared to Q3FY20, the growth in revenue is 23.5 percent.

Segment EBITDA (earnings before interest, tax, depreciation and amortisation) for the quarter improved 4 percent on-year to Rs 373 crore. On a sequential basis; however, there is a decline of 7 percent.

EBITDA margin came in at 9.1 percent which contracted by mere 50 bps year on-year. This was despite the unprecedented inflation in the commodity prices.

The business was supported by robust growth in Discretionary/Out-Of-Home categories such as Snacks, Frozen Snacks and Beverages as well as in Staples & Convenience Foods.

The company continues to gather strong response for its hygiene portfolio which witnessed revenues significantly higher than pre-COVID levels.

The impact of higher raw material inflation was partially negated by implementing strategic cost efficiency initiatives, calibrated price increase, favorable business mix and by giving fiscal incentives to the staff.

The business witnessed strong traction in its online sales which are at nearly 3 times of FY20 sales.

The company has rolled out its B2B app ‘Unnati’, to over 2.2 lakh retailers within 8 months of its national launch. This is further bolstering company’s retailer retailer engagement capabilities.

Hotels

The hotels business witnessed a turnaround with occupancy recovering to the pre-pandemic levels. The average room rent (ARR) improved sequentially but still continue to be below the pre-pandemic levels.

The business turned positive at EBIT level with an EBIT of Rs 51 crore compared to an EBIT loss of Rs 67 crore in the same period a year ago. In the preceding quarter, the business had a loss of Rs 48 crore at EBIT level.

The demand for hotels got a boost from pick up in domestic leisure travel and festive/wedding season while there was a progressive improvement in business travel.

In line with its ‘asset-right’ strategy, the Business has signed 7 agreements/MOUs under the recently launched ‘Mementos’ and ‘Storii’ brands

Agri Business

The business witnessed 100 percent growth in revenues, driven by strong revenue growth in wheat, rice, spices, leaf tobacco exports leveraging strong customer relationships, robust sourcing network and agile execution. Value-added portfolio also witnessed strong traction during the quarter.

The company was able to proactively manage its supply chain which aided in timely execution of customer orders despite port congestion, container shortage and surge in ocean freight rates.

Paperboards, Paper and Packaging

Revenues for this business were up 38.5 percent on year along with margin expansion of 260 bps. This was driven by record high volumes of paperboard and also aided by demand revival across most end-user segments, exports and higher realisations.

The value added paperboard segment grew at a rapid pace aided by higher realisation, strategic capacity expansion and strong exports performance.

 Dividend Payout

The company has declared an interim dividend of Rs 5.25 per ordinary share of Re 1/- each for the financial year ending on 31st March, 2022. The record date for the payment of dividend has been fixed at February 15, 2022 and the dividend will be paid to the eligible shareholders on March 04, 2022.

The stock closed at Rs 234.45, up Rs 2.3 from its previous closed on the National Stock Exchange on February 03.  It has generated returns of 8% in the last one year and is up 7% in this financial year as well as in the past one month.
Gaurav Sharma
first published: Feb 3, 2022 08:22 pm
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