 "ITC Q2 results: Net profit up 6% at Rs 4.8K cr, rural green shoots visible")
Conglomerate ITC on Thursday reported a 6.02 per cent year-on-year rise in consolidated net profit in the July to September quarter of 2023-2024 (Q2FY24) to Rs 4,898.07 crore from Rs 4,619.77 crore, led by cigarettes, FMCG (fast-moving consumer goods) and hotels.
Revenue on a consolidated basis in Q2FY24 at Rs 17,774 crore was higher by 3.9 per cent year-on-year. Sequentially, revenue was up by 3.6 per cent and profit after tax lower by 4.1 per cent. The Bloomberg consensus estimate for revenue was at Rs 17,589 crore and net income adjusted was Rs 4,974 crore.
ITC said, amidst a challenging operating environment and high base effect in some of its operating segments, the company sustained its strong growth momentum during the quarter driven by focus on customer centricity, accelerated digital adoption, execution excellence and agility.
It also said that while public investment remains strong, consumption demand has been relatively subdued especially in the value segment and rural markets on the back of sub-par monsoons and persistent food inflation which saw a sharp spike during the quarter.
However, green shoots of recovery were visible, the company said, with prospects of improved agri output, onset of the festive season, increase in rural wages and government spending on infrastructure auguring well for a recovery in rural markets.
During the quarter, cigarettes saw volume growth, with a continued clawback from illicit trade. Revenues from the segment stood at Rs 8,328.21 crore in the September quarter compared to Rs 7,635.38 crore a year back. Pre-tax profits from the segment stood at Rs 5,002.88 crore as against Rs 4,634.82 crore.
Revenues from the non-cigarette FMCG segment were at Rs 5,303.25 crore compared to Rs 4,894.26 crore. The company said that the FMCG business continued to witness robust growth in both urban and rural markets on a high base, driven by enhanced distribution footprint, superior last-mile execution, deep consumer insights, purposeful innovation and portfolio premiumisation. Pre-tax profits in the segment were at Rs 442.34 crore in the September quarter compared to Rs 323.98 crore in the year-ago period.
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Hotels saw strong growth in ARRs (average room rates) across properties. Revenues from the segment were at Rs 675 crore in the September quarter compared to Rs 560.37 crore a year back. Pre-tax profits from the segment were at Rs 132.95 crore as against Rs 86.85 crore in the year-ago period.
The performance of the paperboards, paper & packaging business was impacted by low-priced Chinese supplies and muted demand in export markets, sharp reduction in global pulp prices, relatively subdued domestic demand and high base effect. Revenues from the segment were at Rs 2,069.88 crore in the September quarter compared to Rs 2,287.58 crore in the year-ago period. Pre-tax profits from the segment were at Rs 314.80 crore as against Rs 629.78 crore a year back.
Stock limits on wheat, ban on non-basmati rice exports and export duty on parboiled rice impacted the agri business. Revenues in the September quarter stood at Rs 3,987.88 crore compared to Rs 4,038.74 crore a year back. Pre-tax profits were, however, higher at Rs 358.78 crore on the back of value-added agri products and leaf tobacco. They were at Rs 355.94 crore a year back.