Missing street estimates, diversified conglomerate ITC on Thursday reported a standalone net profit of ₹4,917.45 crore for the first quarter this fiscal, marginally higher compared to ₹4,902.74 crore for the same period last fiscal.

The cigarette-to-soap maker’s gross revenue from sale for the April-June quarter of the current financial year soared to ₹18,077.24 crore from ₹16,842.93 crore for the corresponding period last year, posting a 7.33 per cent growth year-on-year, which was largely in line with analysts’ estimates.

The company, in a media statement, said the increase in gross revenue in a challenging operating environment was driven by the hotels business, value-added agri products and leaf tobacco. “FMCG–others (non-cigarette FMCG) and cigarettes delivered resilient performance amidst subdued demand conditions,” it said.

Green shoots

ITC said while green shoots of demand recovery emerged during the first quarter in the paperboards, paper and packaging segment, performance for the segment remained impacted largely due to cheap Chinese supplies in international markets including India and a surge in domestic wood prices.

The company’s total expenses during the quarter under review witnessed a 10.82 per cent y-o-y rise at ₹12,366.27 crore, whereas cost of raw materials soared by 9.83 per cent y-o-y, according to a stock exchange filing.

“Amidst a challenging macro-economic and operating environment, and high base effect in some of its operating segments, the company delivered resilient performance during the quarter,” the Kolkata-based conglomerate said.

During Q1FY25, revenue from the cigarette business rose 6.07 per cent y-o-y at ₹7,918.10 crore, while operating profit from the segment increased 6.52 per cent y-o-y at ₹4,959.62 crore during the period. The country’s largest cigarette maker said the business sustained volume claw back from illicit trade on the back of deterrent actions by enforcement agencies and relative stability in taxes.

“As seen in the past, stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, enables volume recovery for the legal cigarette industry from illicit trade leading to higher demand for Indian tobaccos and bolstering revenue to the exchequer from the tobacco sector,” it said.

The non-cigarette FMCG business registered a 6.22 per cent y-o-y growth in its revenue to ₹5,491.03 crore, while the segment posted a 10.44 per cent y-o-y rise in operating profit at ₹475.86 crore during this period. According to the company, this segment delivered a “resilient performance”, amidst muted demand conditions and extreme heatwave in parts of the country. Staples, snacks, dairy, personal wash, fragrances, homecare and agarbatti boosted the growth. Segment Ebitda margin expanded by 25 basis points to 11.3 per cent during the quarter.

Hotels segment

Hotels segment revenue rose 10.89 per cent y-o-y at ₹665.56 crore during the first quarter, while operating profit from the segment increased 11.54 per cent y-o-y at ₹146.36 crore during the period under review. The company said the hotels business witnessed this strong growth despite fewer wedding dates, extreme heatwave and elections impacting domestic travel and out-of-home dining. During the period, as many as seven managed hotels with around 460 keys were operationalised.

The company’s agri business segment revenue rose 22.22 per cent y-o-y at ₹6,973.32 crore in the first quarter this fiscal. Operating profit for the segment stood at ₹355.80 crore compared to ₹355.95 crore for Q1FY24. “Cost escalation in leaf tobacco and other agri-commodities weighed on margins during the quarter,” it said.

ITC’s paperboards, paper and packaging segment revenue fell 6.79 per cent y-o-y at ₹1,976.65 crore, and operating profit during the period also declined by 44.69 per cent y-o-y at ₹261.31 crore.

The performance reflected the impact of low-priced Chinese supplies in global markets including India, muted domestic demand conditions and surge in wood prices, the company said, adding that subdued realisations, and ocean freight continue to weigh on margins.

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