ITC Q1 results: Net profit up 2%; cigarette, agri segments drive revenue
A poll of 17 analysts had estimated ITC to report a standalone profit of ₹ 5,080 crore for the first quarter of the fiscal year.
Standalone revenue from operations grew 19.7% to ₹ 21,058.98 crore during the reporting quarter, up from ₹ 17,593.02 crore a year ago, helped by strong performance in the agri and cigarettes business.
Earnings before interest, taxes, depreciation, and amortization, Ebitda, for the June quarter was ₹ 6,292.3 crore.
The company's cigarette business reported a 7.7% year-on-year (y-o-y) rise in revenue and a 3.7% increase in profit before interest and taxes (PBIT), driven by interventions to counter illicit trade, though the margins were hit by high-cost leaf inventory.
"Consumption of high-cost leaf inventory weighed on margins; partly mitigated through product mix enrichment and cost management intervention. Moderation in leaf tobacco procurement prices witnessed in current crop cycle.' the company said.
Differentiated variants and premium segment of the cigarettes business continue to perform well, the company said. 'Market standing continues to be reinforced through strategic portfolio and market interventions with focus on competitive belts and to counter illicit trade,' the company said.
During the June quarter, ITC's fast moving consumer goods business reported a 5.2% rise in revenues, led by strong performance in staples, biscuits, dairy, premium personal wash, homecare and agarbattis.
The segment's Ebitda margin saw a 50 bps quarter-on-quarter improvement.
Despite elevated year-on-year commodity prices for items like edible oils, wheat and cocoa, the company mitigated the impact through cost management, portfolio premiumization, and targeted pricing actions.
The company said the notebooks industry continued to operate under deflationary conditions due to low-priced paper imports and witnessed opportunistic play by local competition. Meanwhile, the beverages category was hit by unseasonal rains during the quarter, it said.
The company also sustained its trade and marketing investments to support growth and market standing. New age channels, including e-commerce, quick commerce and modern trade, witnessed robust growth, while the company's digital-first and organic portfolio, which includes brands like Yogabar and Mother Sparsh, achieved an annualized recurring revenue (ARR) of approximately ₹ 1,000 crore.
The agri business saw a 39% rise in revenue to ₹ 9,685 crore, driven by trading in bulk commodities and leaf tobacco exports.
Leaf tobacco exports also posted strong growth, and the business continued to leverage its crop development expertise, superior product quality and strong customer relationships.
Lastly, the paperboards, paper and packaging segment revenue grew 7% year-on-year to ₹ 2,115.76 crore.
'The operating environment remained challenging during the quarter, with a sustained influx of low-priced supplies into global markets, including India, elevated domestic wood prices, and subdued realizations," the company said on its paper business. "The business continued to focus on accelerating plantations in core areas, developing new areas, collaborating with other wood-based industries, and implementing satellite-based plantation monitoring systems, among others.'
ITC's new food-tech business, a new vector in the ITC Next strategy, is leveraging the company's strengths in food science, manufacturing and culinary expertise to tap into the fast-growing online food services market. The full-stack food-tech platform has expanded to approximately 60 cloud kitchens across five cities, with a gross merchandise value (GMV) crossing ₹ 100 crore in FY25.
The company is now progressively introducing this initiative across India.
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