ITC, a diversified conglomerate with interests in various sectors, reported its Q1FY24 financial results, showcasing notable performance across segments. Here's a comprehensive analysis of the results:
- Standalone Net Profit Growth: ITC reported a significant 17.58% YoY rise in standalone net profit for the June quarter, reaching Rs 4,902.74 crore compared to Rs 4,169.38 crore in the same period last year. This growth exceeded analysts' predictions of 11-13% profit growth, indicating better-than-anticipated performance.
- Revenue Decline: While net profit grew, revenue for the quarter came in at Rs 16,995.40 crore, reflecting a 7.23% YoY decline compared to Rs 18,320.16 crore in the same quarter last year. Analysts had predicted flattish sales growth, highlighting a slight deviation from expectations.
- Segment Highlights:
- FMCG – Others: ITC's FMCG – Others segment witnessed robust growth, with revenue rising 16.1% YoY and exceeding the Rs 5,000 crore mark for the first time in a quarter. The segment's EBITDA margin also expanded significantly by 325 basis points YoY to 11.0%, driven by various categories including staples, biscuits, noodles, beverages, dairy, agarbatti, and premium soaps.
- Cigarettes Segment: The Cigarettes segment reported a 10.9% YoY rise in sales, driven by sustained volume recovery due to efforts against illicit trade and stable tax policies. The segment's Profit Before Interest and Taxes (PBIT) increased by 11.2% YoY.
- Hotels Business: ITC's Hotels segment had its best-ever Q1 performance, with revenue up by 8.1% YoY and segment PBIT up by 17% YoY. Strong growth in Average Room Rates (ARRs) contributed to the segment's success.
- Agri Business: Revenues for the Agri Business segment rose by 31% YoY (excluding wheat exports), and the segment's PBIT increased by 25.3% YoY. However, the geopolitical tensions and food security concerns globally led to restrictions on wheat and rice exports, impacting the Agri Business opportunities during the quarter.
- Corporate Action: ITC's board approved a scheme of arrangement involving the demerger of its Hotels Business into a resulting company. This corporate action is aimed at optimizing the business structure.
- Management's Perspective: ITC highlighted that its strong customer relationships, agile execution, and strategic interventions across segments contributed to the growth. The company acknowledged geopolitical tensions impacting its Agri Business.
In conclusion, ITC's Q1FY24 results demonstrate a notable rise in net profit, outperforming analysts' predictions. While revenue declined, the company's diversified business portfolio and strategic focus on growth and margins in various segments contributed to the positive financial performance.