ITC Ltd has reported a standalone net profit of Rs 5,020.2 crore for the March quarter, down 1.31 percent from the year-ago quarter, hit by flattish cigarette volumes and lower FMCG margins.
The profit fell short of expectations. A Moneycontrol poll of six brokerages pegged ITC’s consolidated net profit at Rs 5,114 crore, up 0.5 percent.
Revenue came in at Rs 17,752.87crore, rising 1.40 percent, the tobacco and FMCG major said in a regulatory filing on May 23.
Revenue was expected to grow 4.9 percent to Rs 16,945 crore.
The company recommended a final dividend of Rs 7.50 per ordinary share for the financial year ending March 31, 2024. Combined with the interim dividend of Rs 6.25 per share declared on January 29, 2024, the total dividend for the year will be Rs 13.75 per ordinary share.
Earnings before interest, tax, depreciation and amortization (EBIDTA) for the quarter was at Rs 6,162.6 crore declining by 0.8 percent. EBITDA margins have fallen by 70 bps YoY to 37.2 percent.
FMCG-Others segment
The FMCG-Others segment performed well despite weak demand and increased competition from local players. The company achieved strong profit growth through premiumisation, cost management, and strategic pricing. Segment revenue grew by 9.6 percent, with EBITDA increasing by 19.7 percent to Rs 2338.50 crores, and EBITDA margins improved to 11.2 percent, up 94 basis points.
Digital strategies enhanced consumer insights, engagement, and brand loyalty. The product portfolio was strengthened with over 100 new launches focusing on Health & Nutrition, Hygiene, and Convenience. Market coverage doubled compared to pre-pandemic levels, with significant growth in rural areas and digital sales.
The UNNATI eB2B platform now reaches nearly 7 lakh outlets, and digitally enabled sales account for 31 percent of total sales. The ITC e-Store and other D2C platforms are operational in over 24,000 pin codes, enhancing consumer insights and commerce. The FMCG export footprint expanded to over 70 countries, boosted by the PLI scheme for categories like Biscuits, Cakes, Snacks, Dairy, and Ready-to-Eat foods.
The Branded Packaged Foods Businesses are focused on addressing consumer needs with innovations in health, nutrition, wellness, immunity, and convenience. The company's mission is to "Help India Eat Better" by creating a sustainable ecosystem with healthier, affordable, and accessible products.
ITC's 'Mission Millets' promotes a millet-based product portfolio, sustainable farming, and consumer awareness. Products like 'Gluten Free Flour,' 'Multi-Millet Batter Mix,' and 'Ragi Flour' are being scaled up under brands like 'Aashirvaad' and 'Sunfeast.
The company has invested in 11 Integrated Consumer Goods Manufacturing and Logistics facilities to enhance product freshness, market agility, and cost efficiency. Strategic cost management initiatives, including supply chain optimization and automation, have helped counter input cost pressures and support new initiatives.
The Personal Care Products Business focused on building purposeful brands, introducing innovative products, and expanding in emerging channels, leading to strong growth in its premium portfolio.
In the Personal Wash segment, 'Fiama' achieved significant growth with new offerings like 'Fiama Sandalwood Oil & Patchouli' and 'Fiama Men’s Charcoal,' and partnered with Filmfare to raise mental health awareness. 'Vivel' continued to grow with a focus on women’s empowerment through a collaboration with Azad Foundation.
The 'Engage' brand launched a premium EDP range, including a 'gender neutral' variant 'One Soul,' and performed well despite intense competition. The 'Nimyle' brand in Home Care saw strong growth in modern trade and e-commerce, maintaining market leadership with new packaging and better penetration, and collaborated with 'Pet Fed' to promote eco-friendly floor cleaners.
The premium skincare brand 'Dermafique' expanded its product range with new items like 'Hydra Soft Nourishing Body Wash' and 'Aqua Cloud Shower Mousse,' leveraging AI for personalized skin analysis. Additionally, a new manufacturing unit in Uluberia, West Bengal, is set to enhance supply chain agility and reduce costs.
The Education and Stationery Products industry saw strong growth due to higher enrolment and literacy rates, despite increased competition from regional players. The business maintained its leadership through innovative product launches and premiumisation. 'Classmate Interaktiv' notebooks and 'Classmate Pulse' spirals saw strong consumer traction. 'Paperkraft' expanded with new notebook designs, and the Writing Instruments portfolio performed well. The business also strengthened its e-commerce presence and enhanced manufacturing capacity at its Vijayawada facility to support growth and cost reduction.
The Incense Sticks (Agarbatti) category saw strong growth with the 'Mangaldeep' brand launching new products like the 'Scent' sub-brand, offering unique, long-lasting fragrances. Mangaldeep refreshed its Floral and Sandal ranges and continues to promote devotion and wellbeing. The brand co-created superior fragrances with 150 visually impaired evaluators. In Safety Matches, 'Homelites' strengthened its market leadership with its unique positioning of stronger, longer, and karborised sticks.
FMCG – Cigarettes
After a period of sustained growth, the Business saw volume consolidation due to subdued demand and high illicit trade levels. Premium offerings performed well, and increased costs from leaf tobacco prices and taxes were managed through improved product mix, cost management, and pricing strategies. Trade marketing was restructured for better execution.
The Business fought illicit trade by innovating and expanding its premium product portfolio with launches like ‘Classic Alphatec’, ‘Classic Icon’, and ‘Gold Flake Indie Mint’, achieving sequential Net Segment Revenue and Segment PBIT growth of 5.2 percent and 4.1 percent, respectively. Manufacturing facilities were modernized with technologies like Industry 4.0 and Data Sciences to enhance productivity and product excellence.
India's high taxes on legal cigarettes have boosted illicit trade, making it the 3rd largest illicit cigarette market globally. This has led to revenue loss, poor quality products, and a negative impact on tobacco farmers. Recent tax stability has helped the legal industry regain some volume, boosting demand for Indian tobacco and reducing tax losses. The Company advocates for balanced, evidence-based regulations and taxation to support the legal cigarette market while considering India's unique tobacco consumption patterns.
ITC Hotels
The Hotels Segment achieved record highs in Revenue and Profits, driven by strong RevPar growth from retail, MICE, and marquee events. Segment Revenue reached Rs. 2989.50 crores and Segment EBITDA was Rs. 1049.88 crores, growing by 15.6 percent and 26.2 percent respectively, with an EBITDA margin of 35.1%. Renovations, including the reopening of Welcomhotel Chennai, leveraged high season opportunities. The first international property, ITC Ratnadipa in Colombo, Sri Lanka, opened in April 2024, enhancing the luxury hospitality market.
Digital investments continued to improve guest experience and operational efficiency through the ITC Hotels App, which offers food delivery, reservations, room automation, loyalty benefits, and more. The ‘asset-right’ strategy focused on management contracts, with 24 out of 25 new hotels in the last 24 months being managed properties. The business sees growing interest from property owners for partnerships, building a strong pipeline of management contracts.
ITC Hotels maintained its leadership in green hoteliering and sustainability, with 23 USGBC LEED Platinum certified properties. Additionally, 12 hotels received LEED Zero Carbon Certification, and 4 hotels received LEED Zero Water Certification, the first in the world to do so.
Paperboards, Paper and Packaging
The Paperboards, Paper & Packaging Segment faced challenges from weak domestic and export demand, low net realizations, cheap Chinese supplies, rising domestic wood costs, and a high base effect. Despite these obstacles, the Business reinforced its leadership in the Value-Added Paperboard (VAP) segment through focused innovations, customized solutions for end-use industries, and strong end-user engagement. The integrated business model's structural advantages, Industry 4.0 initiatives, strategic investments in a High Pressure Recovery Boiler, and proactive capacity augmentation in Value Added Paperboards helped partially mitigate margin pressures.
Following the results, shares of ITC were trading 0.58 percent up at Rs 442.30 on BSE at 3:02 pm.
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