ITC Q2 results: Net profit rises 10% to Rs 4,927 cr

ITC Ltd reported 10% rise in second-quarter profit on Thursday, as higher costs offset strong demand for its cigarettes and consumer goods.

The tobacco-to-hotels conglomerate's standalone profit rose to Rs 4,927 crore for the three months ended September 30 from Rs 4,466 crore a year earlier, it said in an exchange filing.

On Thursday, ITC's scrip on BSE closed 0.35% lower at Rs 450.05.

The conglomerate's standalone revenue from operations rose 3% to Rs 17,705 crore in Q2FY24 as against Rs 17,160 crore in Q2FY23.

ITC's rise in net profit is smaller-than expected, reported Reuters as analysts, on average, had expected a profit of Rs 4,954 crore, according to LSEG data.

ITC said it saw "resilient performance" in cigarettes segment with net segment revenue up 8.5% YoY and segment PBIT (profit before interest and taxes) up 8% YoY on a high base.

"Sustained volume claw back from illicit trade on the back of deterrent actions by enforcement agencies and relative stability in taxes," said ITC in a post-earnings press release.

ITC, home to household brands such as Aashirvaad, Bingo and Yippie, said its biscuits, snacks, noodles and soaps businesses faced increasing competition, including from regional players.

However, prices of certain commodities such as wheat and sugar are still high, which pushed up ITC's total expenses 3% to Rs 12,087 crore for the three months ended Sept. 30.

“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,” ITC said in its earning statement.

There was sustained volume claw back from illicit trade on the back of deterrent actions by enforcement agencies and relative stability in taxes, it added.

Hotels business saw a “stellar performance” with record high second quarter, ITC said.

The agri business segment revenue, excluding wheat and rice exports, grew 26.4% y-o-y.

Geopolitical tensions and climate emergencies have led to concerns over food security and food inflation globally.

“To ensure India remains food secure, the government has had to impose trade restrictions on agri commodities; consequently limiting business opportunities for the agri business,” the company said.

The performance in paperboards, paper and packaging segment reflects the impact of low priced Chinese supplies and muted demand in export markets, sharp reduction in global pulp prices and high-base effect, it said, adding that the domestic demand was also relatively subdued in certain discretionary categories.

During the quarter, public investment remained strong, and consumption demand has been relatively subdued, especially in the value segment and rural markets on the back of sub-par monsoon and persistent food inflation, which saw a sharp spike, ITC said.

“Green shoots of recovery are visible, with prospects of improved agri output, the onset of the festive season, increase in rural wages and government spending on infrastructure auguring well for a recovery in rural markets,” it said.

With inputs from agencies