ITC Q4 Results: Profit Rises Led By Higher Cigarette Sales

A packet of India Kings cigarette manufactured by ITC Ltd. (Photographer: Amit Bhargava/Bloomberg)

ITC Q4 Results: Profit Rises Led By Higher Cigarette Sales

ITC Ltd.’s quarterly profit rose, in line with estimates, as cigarette sales increased.

Net profit of the consumer goods company—also India’s largest cigarette maker—rose 6.5% over the preceding quarter to Rs 3,755.47 crore in the three months ended March, according to its exchange filing. The consensus of analysts' estimates tracked by Bloomberg was Rs 3,777.9 crore. That came as sales of cigarettes increased 6.9% sequentially.

Revenue rose 9.1% quarter-on-quarter to Rs 15,404.37 crore, against the forecast of Rs 12,085.9 crore.

Highlights (QoQ)

  • Operating profit rose 1.8% to Rs 4,871.12 crore.
  • Operating margin stood at 31.6% versus 33.87%.
  • Cigarette segment’s revenue rose 6.9% to Rs 6,508.43 crore.
  • Revenue of the remaining FMCG business fell 1.5% to Rs 3,694.8 crore.
  • Hotels unit revenue rose 21.5% to Rs 302.35 crore.
  • Agri-business revenue rose 25.6% to Rs 3,383 crore.

Gross profit of the mainstay cigarette division rose 6.5% during the quarter, while that of the FMCG segment declined 24.8%.

Gross profit of agri business segment declined 34.9% over a quarter ago, while the paperboards business' gross profit increased 13.4%.

Shares of ITC closed 0.62% lower ahead of the results announcement, compared with the Nifty 50 Index which remained largely unchanged.

Segmental Revenue

The cigarette-to-hotels conglomerate said it witnessed “strong sequential recovery” across all operating segments.

The paperboards, paper and packaging segment saw strong sequential recovery momentum with improvement in offtake across most end-user industries, it said. The company witnessed sequential improvement in its hotels’ segment revenue aided by higher occupancy and food and beverages business.

“After breaking even in Q3, segment Ebitda improved further to Rs 25 crore in Q4; structural cost management interventions and revenue augmentation measures help in mitigating the impact of negative operating leverage,” ITC said in a statement.

“While the constraints in number of operating outlets and limited hours of operation are posing challenges at the front-end, there are no material supply chain bottlenecks,” the company said.

Its recent learnings in dealing with the pandemic, spanning sales and distribution, supply chain operations, innovation and product development, he said, are being leveraged.

The company continues to monitor the developments closely and is well geared to respond with agility to the evolving situation while managing risks associated with the dynamic environment, it said, adding it’s focused on cost-reduction measures.

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