ITC Ltd, a diversified conglomerate based in India, is a prominent player across multiple sectors including cigarettes, fast-moving consumer goods (FMCG), hotels, paperboards, and agribusinesses.
Known for its iconic brands and extensive market reach, ITC Ltd has established a strong presence in both the consumer and industrial sectors. The company is renowned for its significant contributions to India’s economy, leveraging its broad portfolio to drive growth and profitability.
As ITC Ltd releases its financial results for Q1 FY25, stakeholders are keenly examining how the company’s diverse operations are performing amidst shifting market dynamics and evolving consumer trends.
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ITC Ltd profit surge
In Q1 FY25, ITC Ltd experienced a significant profit boost, with net profit climbing 17.6% to ₹4,903 crore, compared to ₹4,169 crore in the previous year. This impressive growth surpasses analyst predictions, showcasing ITC Ltd’s strong performance in key sectors despite revenue challenges.
ITC Ltd revenue trends
ITC Ltd’s revenue for Q1 FY25 is projected at ₹16,700 crore, reflecting a 5.5% increase from ₹15,828 crore in the same quarter last year. This growth, although positive, falls short of some higher forecasts. The revenue from various segments shows mixed signals:
ITC Ltd cigarette revenue growth
ITC Ltd’s cigarette segment remains a major revenue driver, expected to grow by 6% to 7% year-on-year. This growth is attributed to increased demand and slight volume increases. However, the EBIT margin for this segment might face a minor decline due to rising tobacco leaf costs.
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ITC Ltd FMCG revenue insights
In the FMCG sector, ITC Ltd is anticipated to achieve a revenue increase of 7% year-on-year. The company’s emphasis on premium products is evident, contributing to revenue growth. Additionally, EBIT margins in the FMCG segment are expected to improve by 10 basis points.
ITC Ltd hotel sector performance
The hotel segment of ITC Ltd is set to grow by 8% to 9% year-on-year. This growth is driven by a rebound in travel demand, although challenges such as elections and heatwaves have impacted performance. EBIT margins for this segment are projected to rise by 250 basis points.
ITC Ltd agri and paperboards challenges
The Agri and paperboards segments of ITC Ltd are facing difficulties. The Agri business is expected to remain flat, while the paperboards segment might see a 2% year-on-year decline. This downturn is due to weak domestic demand and competition from cheaper imports, affecting the EBIT margin.
Quarterly performance (Amount in cr):
| Quarterly | Mar 2024 | Dec 2023 | Sep 2023 | Jun 2023 | Mar 2023 |
| Sales | 16,579 | 16,483 | 16,550 | 15,828 | 16,397 |
| Other Income | 798 | 1,135 | 895 | 708 | 746 |
| Total Income | 17,377 | 17,618 | 17,445 | 16,536 | 17,144 |
| Total Expenditure | 10,834 | 10,881 | 10,921 | 9,980 | 10,537 |
| EBIT | 6,543 | 6,737 | 6,524 | 6,556 | 6,606 |
| Interest | 12 | 12 | 10 | 10 | 11 |
| Tax | 1,511 | 1,152 | 1,586 | 1,642 | 1,507 |
| Net Profit | 5,020 | 5,572 | 4,926 | 4,902 | 5,086 |
ITC Ltd future outlook
Looking ahead, ITC Ltd’s performance will be influenced by several factors, including demand trends, competitive dynamics, and raw material prices. Key areas to watch will include the management’s outlook on the hotels, agri, and paper & packaging businesses.
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Conclusion
ITC Ltd’s Q1 FY25 results reflect a strong profit performance, with a notable 17.6% increase in net profit, demonstrating the company’s robust position in its core sectors. While the revenue growth of 5.5% signals positive progress, it falls short of some optimistic forecasts, indicating mixed performance across different segments.
The cigarette business continues to be a major revenue driver, with promising growth despite rising costs. The FMCG and hotel sectors also show encouraging trends, with revenue and margin improvements. However, challenges persist in the Agri and paperboards segments, affecting overall profitability.
As ITC Ltd navigates these varied performance metrics, the company’s future outlook will depend on its ability to manage segment-specific challenges and leverage growth opportunities in its stronger areas. Investors and analysts will be keenly watching how ITC Ltd addresses these dynamics in the coming quarters.
