ITC Q2 Results: Profit Sees Modest Growth, Revenue Slips 3.4%

ITC Ltd.’s net profit rose 2% in the September quarter, while its revenue saw a 3.4% decline, according to the standalone financial results declared by the company on Thursday.

The cigarette maker posted a bottom line of Rs 5,179.82 crore, as against Rs 5,078.34 crore in the year-ago period.

Revenue and Earnings

The company’s revenue, however, fell 3.4% to Rs 18,021.25 crore as against Rs 18,649.12 crore in the same quarter last year.

Earnings before interest, tax, depreciation and amortisation went up 2% to Rs 6,252.01 crore from Rs 6,123.29 crore while margin stood at 34.7% as against 32.8%. in the year-ago period.

Segment-Wise Performance

Revenue down 3.4% to Rs 18,021.25 crore versus Rs 18,649.12 crore (Estimate: Rs 19,466 crore).

Net Profit up 2% to Rs 5,179.82 crore versus Rs 5,078.34 crore (Estimate: Rs 5,131 crore).

Ebitda up 2% to Rs 6,252.01 crore versus Rs 6,123.29 crore (Estimate: Rs 6,390.7 crore).

Margin at 34.7% versus 32.8% (Estimate: 32.8%).

Cigarettes Business

Cigarettes business grew 6.8% year-on-year in the second quarter of this financial year. The strong performance was sustained in the differentiated and premium offerings. The company has made strategic portfolio and market interventions to counter illicit trade, focus on competitive belts, drive growth and reinforce market standing.

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FMCG Segment

FMCG segment rose 7% in quarter ended September despite operational challenges. Excessive rains in many parts of the country and the new GST regime were among the major challenges that disrupted the short-term business disruptions.

While staples, dairy, premium personal wash and agarbattis drove growth, while notebook industry was under pressure due to low-priced paper imports and opportunistic play by regional players.

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Paper Business

Paper business was up 5% in this quarter despite the overall industry facing pressure due to low-priced supplies, high wood prices and subdued realisation. However, it added that there are initial signs of moderation in wood prices with improving availability.

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Agriculture Business

In contrast the agriculture business was down 31% in quarter ended September. Value Added Agri exports during the quarter were relatively subdued due to delayed call-offs by customers amid uncertainty around US tariffs. The company also added that there will be continued focus on market development in new geographies and scaling up the business leveraging structural capabilities (sourcing, processing).

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Conclusion

ITC Ltd.’s Q2 results have been a mixed bag, with the company’s net profit rising 2% while its revenue fell 3.4%. The company’s cigarettes business grew 6.8% year-on-year, while the FMCG segment rose 7% despite operational challenges.

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