New Delhi: Cigarette-to-FMCG major ITC Ltd reported a 20% year-on-year rise in revenue from Rs.17,593 crore in Q1FY25 to Rs.21,058 crore in the corresponding quarter this year. However, the company saw a muted growth in net profit, rising 2% from Rs.4.819 crore last year to Rs.4,912 crore this quarter.
The company’s flagship cigarette business beat expectations, with its revenue growing to Rs.8,520 crore from Rs.7,918 crore last year, a 7.6% YoY growth, beating analysts’ 5-6% growth expectations.Its paperboard segment saw a 7% growth as well, from Rs.1,977 crore to Rs.2,116 crore, but the segment’s net profits were down 37.8% from last year. A slowdown in notebook sales has hurt growth, particularly as cheaper, lower-priced alternatives flood the markets. The company’s other significant segment, agri business, reported a 38.9% YoY growth from Rs.6,973 crore to Rs.9,685 crore, primarily driven by leaf tobacco exports.
Even though ITC’s performance in the cigarette segment has remained firm, the company could face threats to its dominance with a potential increase in cigarette taxes and increasing competition. Analysts remain cautious about ITC’s future outlook, even though most brokerage firms like Citibank, Goldman Sachs and Jefferies maintain a ‘buy’ rating for the stock. The primary concern remains the increasing cost of leaf tobacco, which could hurt margins in the long run.
ITC shares have fallen almost 13% in the past year, even though the company’s shares have consistently risen almost 116% from Rs.196 to Rs.419 on August 4. The company has remained an investor favourite for years, particularly for its consistent dividend payouts and a high dividend yield of 3.42%.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
