ITC Q1 FY25 Results: Net profit dips marginally, revenue rises by 7.5%

ITC Q1 FY25 Results: Cigarette-to-hotel conglomerate ITC reported a slight decline in net profit for the first quarter of FY25, despite a solid 7.5 per cent increase in revenue. The company’s consolidated net profit dropped by 0.26 per cent year-on-year (YoY) to Rs 5,091.59 crore from Rs 5,104.93 crore in the same period last year. This decline was primarily attributed to weaker performances in its paperboard, paper and packaging, hospitality, and agri-business segments.

Revenue growth surpasses expectations

ITC's consolidated gross revenue for Q1 FY25 reached Rs 20,029.60 crore, up from Rs 18,639.48 crore in Q1 FY24. This 7.5 per cent growth exceeded the Bloomberg consensus estimate of Rs 17,892 crore for revenue net of excise, which came in at Rs 18,457 crore. However, the net profit fell short of the Bloomberg estimate, which had pegged it at Rs 5,451 crore.

Segment performance: Cigarettes and FMCG show resilience
The cigarette segment, a significant revenue driver, recorded a 5.8 per cent YoY growth, with revenue reaching Rs 8,842.22 crore in Q1 FY25. Pre-tax profits from this segment rose by 6.29 per cent to Rs 5,255.06 crore, supported by stable taxation and strong enforcement actions against illicit trade.
The non-cigarette FMCG segment also performed well, with revenue growing by 6.3 per cent YoY to Rs 5,498.80 crore and pre-tax profit increasing by 10.4 per cent to Rs 479.17 crore.

Challenges in Hospitality, Paper, and Agri-Business Segments

The hospitality segment saw a 14.29 per cent YoY increase in revenue to Rs 713.30 crore, but pre-tax profit declined by 9 per cent to Rs 122.21 crore. The newly launched ITC Ratnadipa in Colombo, Sri Lanka, weighed on the overall performance, despite the operationalization of seven managed properties during the quarter.

The paperboards, paper, and packaging segment faced significant challenges due to cheap Chinese supplies and rising domestic wood prices, leading to a 6.78 per cent YoY drop in revenue to Rs 1,976.85 crore and a 45.6 per cent decline in pre-tax profit to Rs 256.15 crore.

In the agri-business segment, while revenue surged by 22.19 per cent to Rs 6,997.89 crore, pre-tax profit dropped by 2.2 per cent YoY to Rs 344.60 crore. The decline was driven by cost escalations in leaf tobacco and other agri-commodities, along with the depreciation costs associated with a new nicotine and nicotine derivatives manufacturing facility.

Outlook Amidst Challenging Economic Environment
ITC’s Q1 FY25 performance reflects a challenging macroeconomic and operating environment. The company noted resilience in its core cigarette and FMCG segments, despite subdued demand conditions and a high base effect in certain operations. Going forward, ITC will focus on navigating these challenges while capitalising on emerging opportunities across its diverse business segments.