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Informist, Friday, Aug. 1, 2025

 

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--ITC Apr-Jun net profit INR 49.12 bln
--Analysts saw ITC Apr-Jun net profit at INR 49.83 bln
--ITC Apr-Jun net profit INR 49.12 bln vs INR 49.17 bln year ago
--ITC Apr-Jun revenue INR 210.59 bln vs INR 175.93 bln year ago
--ITC Apr-Jun cigarettes revenue INR 85.20 bln vs INR 79.18 bln year ago
--ITC Apr-Jun paper, packaging revenue INR 21.16 bln vs INR 19.77 bln yr ago
--ITC Apr-Jun agri business revenue INR 96.85 bln vs INR 69.73 bln year ago
--ITC Apr-Jun total expenses at INR 151.76 bln vs INR 118.70 bln year ago
--ITC board OKs amalgamation of arms Sresta Natural Bioproducts, Wimco
--Merger of arms with co to enable greater cash management efficiency
--Apr-Jun EBITDA INR 62.61 bln vs INR 60.87 bln year ago
--Strong Q1 revenue growth driven by cigarettes, agri business, FMCG
--Saw resilient performance in Q1 amid challenging operating environment
--Saw moderation in leaf tobacco procurement prices in current crop cycle

 

By Avishek Rakshit

 

KOLKATA – Rising profits from its core cigarettes business and the agricultural vertical helped ITC Ltd. to stave off the falling profit from its non-cigarette consumer goods portfolio and the paper and paperboards business during the June quarter. The company reported a flat net profit of INR 49.1 billion for Apr-Jun, which fell marginally short of the Street's projection of INR 49.8 billion.

 

All of the company's segments registered revenue growth during the June quarter despite muted demand conditions for consumer goods and the pressure on prices of paper and paperboards resulting from dumping of similar goods by China. ITC's revenue during Apr-Jun grew by 19.7% on year to INR 210.6 billion.

 

However, the company's net profit is not comparable on an on-year basis and trailing basis. Following the demerger of ITC Hotels Ltd. from the company on Jan. 1, ITC has been reporting the profit from the hotels business as profit from discontinued operations. Although in the June quarter, ITC did not report any profit from such discontinued operations, the company reported a profit of INR 975.2 million from such operations in the year-ago period. In the Jan-Mar quarter, the profit from discontinued operations was INR 146.9 billion.

 

In a statement, ITC said that its differentiated and premium portfolio in cigarettes continued to perform well and its market standing continues to be reinforced through strategic portfolio and market interventions with focus on competitive belts and to counter the illicit cigarette trade. As a result ITC's revenue from cigarettes rose by 7.7% on year to INR 85.2 billion which accounted for 40% of the June quarter revenue. The pre-tax profit from cigarette sales grew by 3.7% on year to INR 51.5 billion comprising 79% of its pre-tax profit from continuing operations.

 

ITC's revenue from the agricultural segment increased by nearly 39% on year to INR 96.9 billion owing to increased trading opportunities and export of leaf tobacco. The pre-tax profit from this segment from continuing operations or profit before interest and tax increased by 22% on year to INR 4.3 billion in the June quarter.

 

In a statement, ITC said that the revenue growth in its agricultural business was driven by agile execution of trading opportunities in bulk commodities leveraging multi-channel and digitally powered agricultural commodity sourcing network. Leaf tobacco exports also posted strong growth aiding the top line. ITC continues to focus on scaling up exports of its value-added agricultural goods portfolio. The revenue was also boosted by commissioning of the manufacturing facility in the June quarter which makes nicotine and nicotine-derived products for exports.

 

However, it was on the non-cigarette consumer goods portfolio that ITC took a hit. Although revenue increased by 5.2% on year from this segment at INR 57.8 billion, accounting for 27% of the June quarter top line, the profit before interest and tax took a beating and fell by 16.5% on year to nearly INR 4 billion accounting for a meagre 6% of the pre tax profit from continuing operations.

 

In the statement, ITC said that the non-cigarettes consumer goods business witnessed a pick-up in growth momentum and grew by 8.6% on year, excluding sales of notebooks which have been under pricing pressure for the past 3-4 quarters. The notebooks industry continues to operate under deflationary conditions due to low-priced paper imports and witness opportunistic play by local and regional competition, ITC said.

 

Sales of beverages was impacted by unseasonal rains during the quarter as well. The staples, biscuits, dairy, premium personal wash, homecare and incense sticks were the prime revenue drivers in the June quarter.

 

New age sales channels like e-commerce, quick commerce, and modern trade witnessed robust growth on the back of sharp execution of channel-specific joint business plans, collaborations, format-based assortments and category-specific sell-out strategies, ITC said.

 

As part of sales strategy, the company continues to target opportunity areas by improvising its product mix in sales channels, push towards increased sales of premium goods, and targeted marketing approaches.

 

ITC said that during the June quarter, buoyancy in agriculture and service sector, moderating inflation and rural wage growth are some of the key positives. On the other hand, industrial growth, automobile sales, credit growth and electricity and fuel consumption remain subdued. Rural demand continued to demonstrate resilience, and expectations of a normal monsoon and kharif crop sowing trends augur well for the rural economy. Early signs of recovery in urban consumption demand were visible during the quarter, it added.

 

In the paper and paperboards portfolio, ITC said that the operating environment remained challenging during the quarter with an influx of low-priced supplies from China which upset prices in India. Elevated domestic wood prices and subdued realisations upset ITC's profit from this segment further. Although revenue from its paper and paperboards business grew by 7% on year at INR 21.2 billion in the June quarter, earnings before interest and tax fell sharply by 38% on year at INR 1.6 billion.

 

The company's total expenses shot up as well by 27.9% on year to INR 151.8 billion owing to increased procurement prices. Raw material costs – the largest cost overhead - went up by 15.3% at INR 61.7 billion and purchase of stock in trade increased by 25.4% on year to INR 39.2 billion.

 

Despite challenging market conditions which impacted non-cigarette consumer goods sales and the paper and paperboards division in the June quarter, the performance of the cigarette and agricultural business drove the earnings before interest, taxes, depreciation, and amortisation which increased by 2.8% on year to INR 62.6 billion.

 

In the statement, ITC said that procurement costs of key commodities for its consumer goods segment remained high. Although the cigarette division fared well in registering growth, procurement of leaf tobacco at higher costs and carry-over of high-cost inventory damaged the margins. At the same time, higher leaf tobacco prices helped ITC's agricultural trading division better its revenues. However, ITC said that it saw moderation in leaf tobacco procurement prices in the current crop cycle.

 

Aiming for an improved cash management efficiency, ITC's board Friday approved the amalgamation of its subsidiaries - Sresta Natural Bioproducts and Wimco – with the company.

 

Friday, shares of ITC closed 1.09% up at INR 416.45 on the National Stock Exchange. The company declared its June quarter results after trading hours. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Deepshikha Bhardwaj

 

 

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