Cigarettes, agri-biz lift ITC's sales in December quarter

Beating the street estimates, salt-to-cigarettes major ITC Ltd on Thursday reported a 30 per cent jump in its operating revenue. The Kolkata-based FMCG major posted Rs 18,366 crore revenue from operations for the October-December quarter, up from Rs 14,125 crore in the corresponding quarter last year.

While the firm's non-tobacco fast moving consumer goods (FMCG) business grew by 9 per cent year-on-year, it was the agri-business and cigarettes that lifted its fortunes during the quarter. ITC's revenue from agri-business jumped 90 per cent Rs 5,157.4 crore in the third quarter of FY22 from Rs 2,694.3 crore in the year-ago period, while it grew by 82.7 per cent sequentially.

According to the company, it was the exports markets that drove its agri-business growth during the quarter. In fact, the local market has suffered from poor demand during the October-December quarter due to higher levels of inflations - industry data showed.

The agri-business revenue was "driven by strong revenue growth in wheat, rice, spices, leaf tobacco exports leveraging strong customer relationships, robust sourcing network and agile execution. Robust growth in Value-added portfolio. Proactive supply chain management aided in timely execution of customer orders despite port congestion, container shortage and surge in ocean freight rates," ITC management said in a statement.

The core cigarettes business that has been a slow growing segment for the company for years, posted impressive growth this time. At Rs 6,959 crore, its revenue from cigarettes was 14.3 per cent higher y-o-y and grew 12 per cent sequentially. According to Edelweiss securities, it was way above its estimated growth rate of 8 per cent. "Cigarette volume growth at 14 percent y-o-y on a negative base of 5 per cent versus our expectations of 8 per cent. So, cigarette volume has grown even versus pre-Covid levels in December, 2019 quarter", it said.

"Robust recovery continued across markets aided by increase in mobility and, agile supply chain and market servicing. Market standing reinforced leveraging portfolio vitality, product accessibility and execution excellence. (Our) Business continues to invest in augmenting assortment to strengthen its competitive position and counter illicit trade," ITC said.

Also read: ITC Q3 net profit rises 15% to Rs 4,056 cr, interim dividend of Rs 5.25 declared