ITC Q3 net profit rises 23.4% to Rs 5,006 cr on growth across segments

Tobacco-to-hotels major ITC on Friday reported a 23.4 per cent year-on-year (YoY) jump in net profit in the December quarter of the current financial year (Q3FY23) to Rs 5,006.65 crore from Rs 4,056.73 crore in the same quarter last year. The company said it was led by growth across segments

Revenue from operations was up 3.56 per cent at Rs 19,020.65 crore, managing to beat the Bloomberg consensus estimate of Rs 18,837 crore. The estimate for net income was Rs 4,741.8 crore. Sequentially, net profit was up by 8.4 per cent and revenues 2.2 per cent.

ITC said that the board has recommended an interim dividend of Rs 6 per share (previous year Rs 5.25 per share) for the financial year ending March 31, 2023. The company said that economic activity continued to gather momentum with sequential moderation in commodity inflation, even as core inflation remained elevated.

ITC mentioned that rural demand continued to be relatively subdued, while improving sequentially. Consumer sentiments remained below pre-pandemic levels even as it improved during the quarter. 

Analysts pointed to cigarette volume growth and fast moving consumer goods (FMCG) margins as major drivers for performance. Segment revenues from cigarettes stood at Rs 8,085.72 crore compared to Rs 6,958.79 crore a year ago. Pre-tax profits were at Rs 4,862.33 crore as against Rs 4,187.10 crore.

The company said that volume stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, continued to enable volume recovery for the legal cigarette industry from illicit trade leading to higher demand for Indian tobaccos.

ITC said that the non-cigarettes FMCG business witnessed strong growth across channels and markets (both urban and rural) driven by ramp-up in outlet coverage, enhanced penetration and superior last mile execution. Overall, input costs remained elevated even as some commodities witnessed sequential moderation in prices, it added.

Revenues from the non-cigarettes FMCG segment was at Rs 4,848.95 crore compared to Rs 4,099.47 crore. Pre-tax profits from the segment stood at Rs 351.91 crore compared to Rs 246.25 crore.

The hotels business posted a 'stellar' performance with revenue per available room (RevPAR) ‘well ahead’ of pre-pandemic levels. In the agriculture business, restrictions imposed on wheat and rice exports drove down revenue but pre-tax profits were up YoY. In the paperboards, paper and packaging segment, revenues and pre-tax profits were up.