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Cigarette-to-soap maker ITC is expected to report a muted fourth quarter last fiscal owing to flat revenue growth on a year-on-year basis.
Brokerages expect cigarette sales volumes to stay flat and EBIT margin for the non-cigarette FMCG business to come under pressure. Hotels business is expected to report good growth.
The country’s largest cigarette maker is scheduled to declare its January-March results on Thursday. The Kolkata-based conglomerate’s board of directors will also consider and recommend a final dividend for the financial year ended March 31, 2024.
ITC Ltd had reported ₹5,086.86 crore standalone net profit on a revenue of ₹17,224 crore for the fourth quarter of financial year 2022-23. Overall EBITDA margin was at 36.1 per cent, up by 385 basis points year-on-year.
According to Axis securities, the company is expected to register 2 per cent revenue growth for Q4FY24 as the cigarette business revenue is likely to grow 4 per cent y-o-y (with no volume growth) and non-cigarette FMCG is likely to grow 7 per cent y-o-y. “EBITDA margin is expected to remain flat on account of subdued performance in agri and paper board business,” it said in a report.
“We expect revenue/EBITDA to dip 1 per cent/0.9 per cent y-o-y, but PAT is anticipated to grow 3 per cent y-o-y. We expect cigarette sales to grow 3.4 per cent y-o-y (with flat volumes),” Nuvama Institutional Equities said in its report on ITC.
“FMCG others shall grow 6 per cent year-on-year, led by pricing with volume growth in low single-digits y-o-y. We expect EBIT margins for FMCG others to stay flat quarter-on-quarter, but likely to dip y-o-y as the base quarter had high fiscal incentives, which were bunched up. Hotel business continues to do well,” Nuvama added.
Prabhudas Lilladher, in its report, said the conglomerate’s hotels business is expected to sustain strong growth while FMCG would report decline in margins due to PLI benefits on the base. “Paper segment will undergo another weak quarter on low pulp prices and Chinese dumping. Agri business will also be under pressure in most segments,” it said.
On Thursday, the ITC scrip opened at ₹441.45 against Wednesday’s close of ₹439.75 apiece on BSE. At 12.30 pm, the stock was trading at ₹439.45.
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