ITC Q2 profit, revenue rise but shares extend losses

Cigarette-to-hospitality conglomerate ITC Ltd has reported a 10% increase in its consolidated net profit for the second quarter as sales rose, but its shares continued to fall after touching a one-year high earlier this month.

Profit for the July-September climbed to Rs 3,714 crore from Rs 3,368 crore during the year-ago period. 

Sequentially, the profit after tax grew 13% from Rs 3,276 crore in the three months ended June.

The rise in profit was in line with the increase in revenue from operations, which grew 13% to Rs 14,844 crore from Rs 13,147 crore during the year ago period. 

The numbers were above the estimates projected by several analysts, even though cigarette sales volumes were lower than expected. Jeffries, however, said in a report that lower cigarette volumes were offset by higher margins. 

Shares of ITC, a stock market laggard in recent years, fell 3% in early afternoon trade to Rs 231.25 apiece on the BSE, where the benchmark Sensex was 0.8% lower. The shares have declined 12.5% from a one-year high of Rs 265.30 apiece on October 18, but are still up 41% from a one-year low touched in October last year.

ITC Q2: Other highlights

1) Profit before tax rose to Rs 5,055 crore from Rs 4,565 crore a year earlier.

2) Revenue from the cigarette segment increased to Rs 6,219 crore from Rs 5,627 crore a year ago.

3) The cigarette segment saw a 10% increase in profit before tax to Rs 3,762 crore.

4) Revenue from the FMCG business rose 1% on a year-on-year basis to Rs 10,623 crore.

5) Revenue from the hotels business jumped 253% to Rs 311 crore as the hospitality sector recovered from the impact of Covid-related lockdowns

6) Revenue from other businesses grew just 2.8% over the year-ago period to Rs 4,043 crore.

ITC commentary

The company said it saw a broad-based recovery across sales channels and markets, as the intensity of the pandemic declined and the pace of vaccination picked up in the country. 

Although there was an uptick in demand, the positives were also offset by a steep inflationary impact on input costs as well as supply chain disruptions. 

ITC also reported a significant growth in its revenue from its agribusiness. This was mainly on account of growing exports of commodities like wheat, rice and leaf tobacco, as well as its strong sourcing network and the customer relationships, which it was able to take advantage of. 

The company launched two new hotel brands, ‘Storii by ITC’ and ‘Momentos by ITC’. Two new hotels were also launched in the country under the brand ‘Welcome’.