ITC Q1 Results Live Updates: ITC share price falls ahead of Q1 earnings; net profit seen rising 16% YoY amid muted sales

Centrum Broking remains positive on ITC as it believes the company is placed to deliver stronger, competitive and profitable growth in years to come.\

“With new vectors of growth and competitiveness ITC is nurturing mega trends in digital through Foodtech, ITCMAARS, Master-Chef, Sunfeast-baked-creations to create future-ready portfolio seeking structural competitiveness. The emerging trends for plastic substitution will provide further fillip to the demand for paperboard and plat based moulded fibre biodegradable products. The hospitality industry is poised for strong growth due to confluence of favourable factors.

We believe guided by its ITC-Next strategy, ITC is placed to deliver strnger, competitive and profitable growth ahead,” Centrum Broking said in a report.

It reiterated strong ‘Buy’ on ITC, with a DCF-based target price of ₹486 per share (implying 26x FY25E EPS).

ITC Next strategy seeks to architect the next horizon of competitiveness, growth and profitability in the face of global uncertainties, ITC Chairman & Managing Director Sanjiv Puri told in his address to shareholders at the company’s 112th Annual General Meeting.

The agility displayed particularly over the last 2 years attests to the robustness of the ITC Next strategy and stands testimony to the exceptional perseverance displayed by your Company’s dedicated employees, said Puri.

Brokerages forecast ITC Hotels’ share price to range between ₹15 to ₹27 after demerging its hotel operations into a new firm, named ITC Hotels where it will hold 40% ownership and the remaining 60% will be controlled by shareholders directly.

The demerger of the hotel business is advantageous for ITC, according to Centrum Broking’s analysis. The research states that while ITC spends roughly 20% of its capex on this area, the hotel industry provided 3.7% of the company’s total sales and 2.3% of its EBIT in FY23. Because of the substantial increase in domestic demand for the hospitality industry, the brokerage anticipates that hotel company revenues would reach ₹38.7 billion with an EBITDA margin of about 34.1%.

“On comparable valuations we assign EV/EBITDA of 25x on FY25E to arrive at ₹27 per share value. We retain ‘Buy’ with target price of ₹486,” said the brokerage in its report. Read here

ITC Ltd. board had given in-principle approval for the demerger of its hotels business and to incorporate a wholly owned subsidiary called ITC Hotels.

“After due consideration, the Board accorded its in-principle approval to the demerger of Hotels Business under a scheme of arrangement, with the Company holding a stake of about 40% in the new entity and the balance shareholding of about 60% to be held directly by the Company’s shareholders proportionate to their shareholding in the Company,” ITC said in a regulatory filing on July 24. Read more here

In the last 16 months alone, ITC added 18 hotels in its portfolio, mostly through management contracts. 

Today, managed properties account for 55% of total rooms. ITC Narmada launched this year in Ahmedabad, is the first LEED Platinum hotel in Gujarat and has received excellent customer response, ITC Chairman and Managing Director Sanjiv Puri told ITC shareholders in his speech at the company’s 112th Annual General Meeting (AGM) held on August 11.

As the diversified conglomerate ITC will delivery its Q1 results today, along with its financial performance, investors will also focus on a slew of other factors that will determine the company’s future coarse.

ITC’s continued Cigarette volume and mix improvement along with FMCG business EBIT margin would be key monitorables going ahead. Moreover, continued positive paper cycle, outlook on Agri and Hotel businesses will also be on investors’ and analysts’ radar.

ITC share price was in the red ahead of the announcement of Q1 results today. ITC shares were opened flat at ₹448.70 apiece on the BSE. The stock also made a high of ₹450. However, selling emerged in the stock and it made an intraday low of ₹445.65 apiece.

At 1:35 pm, ITC shares were trading 0.43% lower at ₹446.75 apiece on the BSE.

Sanjiv Puri, CMD of ITC, during the company’s 112th Annual General Meeting, said that the company built 25+ vibrant brands of FMCG business in a short span.

“In a relatively short span of time, your Company has built a portfolio of 25-plus vibrant brands in the FMCG Businesses that represent an annual consumer spend of ₹29,000 crore. It is a source of immense satisfaction that 2 of our flagship brands are already in the league of over ₹5,000 crore, whilst 5 more brands have touched spends between ₹1,000 crore and ₹4,000 crore,” he said.

During the period FY17 to FY23, the turnover of FMCG-Others grew 1.8x, whilst Segment EBITDA margins expanded by 770 bps. Export earnings since FY17 crossed US$ 5 billion, of which agri products contributed more than 60% thus effectively linking the Indian farmer to global markets. Your Company’s world-class FMCG brands, paperboards, packaging and agri products are now exported to over 100 countries.

ITC’s earnings before interest, taxes, depreciation and amortization (EBITDA) in the April-June quarter of FY24 is expected to rise 8% to ₹6,099.8 crore from ₹5,647.5 crore in the corresponding quarter of the last fiscal. EBITDA margin in Q1FY24 may expand to 36% from 32.7%, YoY.

However, on a sequential basis, EBITDA is likely to fall by 1.8% from ₹6,209.4 crore and EBITDA margin may also contract.

We expect ITC’s overall topline to be down by 2.3% YoY even while we expect 13.5% YoY revenue growth in cigarette business led by a volume growth of 11% YoY (4-yr CAGR: ~3.5%). Other-FMCG business is expected to grow at ~16% YoY, Yes Securities said.

While decline in Agri Business (sitting on high base) and subdued PPP will drag ITC’s overall revenue growth on a YoY basis. At the company level, we expect EBITDA margin to expand ~430 bps YoY to 37% led by gross margin improvement. EBITDA and APAT are thus likely to grow by 10.6% YoY and 19% YoY, respectively, the brokerage added.

We model 12% YoY growth in cigarette revenue, with volume growth of 10% YoY (4% 4-year CAGR). The non-cigarette business is expected to fall 9% YoY (impacted by agribusiness). We model 14% YoY growth in FMCG, HDFC Securities said in a note.

It expects cigarette EBIT to grow by 13% YoY and models FMCG EBIT margin at 8% versus 4.6% YoY. The brokerage firm estimates EBITDA to grow by 11% YoY.

ITC held its 112th Annual General Meeting on August 11 where its Chairman and Managing Director Sanjiv Puri address the company shareholders. The recently-announced demerger of ITC Hotels from the parent company will unlock value for ITC shareholders and sharpen capital allocation, said Puri.

Speaking about the FMCG business, Puri said that the company built 25+ vibrant brands of FMCG business in a short span. Read full report here

ITC Chairman and Managing Director Sanjiv Puri, in his address to the company’s shareholders at its 112th Annual General Meeting on August 11, said that the demerger of ITC hotels business will sharpen capital allocation and unlock value for ITC shareholders.

“For ITC, the reorganization of business will sharpen capital allocation, improve asset efficiency ratios,  and enable leverage of institutional synergies,” Puri said.

For the demerged entity, Puri said that the continued interest of ITC in it will provide long-term stability and instill a sense of assurance among partners, investors and employees while enabling the new entity to leverage ITC’s institutional strengths, including the timeless goodwill, world class brands and governance processes.

“The proposed reorganization will enable ITC to architect the next horizon of growth as a pure play hotels entity with a strong balance sheet, healthy pipeline, specially when industry is poised for robust growth,” Puri added.

ITC’s cigarettes business continues to deliver volume growth and market share gains in the absence of competition from illicit trade. The FMCG – Others segment has also delivered strong growth across markets and product lines, and as input prices decline, we anticipate an expansion in margins too.

We expect 5% YoY volume growth in the Cigarettes business. We expect gross margin and EBITDA margin to expand ~720 bps and 460 bps, YoY, respectively, on a weak base.

Outlook on the agri, paper & packaging and Hotel businesses is a key monitorable. Moreover, outlooks on Cigarettes and other FMCG demand are also key monitorables, brokerage firm Motilal Oswal Financial Services said.

ITC’s cigarette volumes are likely to expand by 9.0%. FMCG expected to post 15.0% growth with YoY margin improvement, while paper business to grow 3% and Hotel revenues to grow by 17%. Overall PAT expected to grow by 13.2%, said brokerage firm Prabhudas Lilladher.

ITC Q1 revenue is likely to remain flat on a year-on-year (YoY) basis, largely on the back of high base effect in the agriculture business. ITC is expected to report a topline of around ₹17,548 crore in Q1FY24 as compared to revenue of ₹17,289.7 in the same quarter last year.

ITC share price was lower in the early trade on Monday ahead the announcement of Q1 results today. ITC shares were opened flat at ₹448.70 apiece on the BSE. The stock also made a high of ₹450. However, selling emerged in the stock and it made an intraday low of ₹445.65 apiece.

At 9:55 am, ITC shares were trading 0.59% lower at ₹446.05 apiece on the BSE. 

ITC Q1 profit is expected to rise by 16.7% to ₹4,886 crore from ₹4,169.4 crore in the same quarter last year, as per average analysts’ estimates. Cigarette business EBIT is likely to grow by 13% YoY, while FMCG EBIT margin may jump to 8% from 4.6% YoY.

ITC Q1 net profit is expected to rise 16.7% on-year to ₹4,886 crore led by steady growth in cigarette and fast-moving consumer goods (FMCG) businesses, as per brokerage poll by Livemint. Read full report here

ITC Ltd will announce its Q1 results today. The diversified conglomerate is expected to witness a decent double digit growth in the net profit for the first quarter of FY24, while its revenue is likely to remain flat on a year-on-year (YoY) basis.