Explore ITC Anticipates Strong Q3 financial triumph, projecting a 3% rise in net profit and 5% revenue growth. Positive outlook across diverse segments including FMCG, hotels, and agri business. Stay informed on potential market impacts.
In the upcoming financial results announcement on Monday, January 29, FMCG giant ITC is anticipated to reveal a robust performance for the third quarter. Analysts project a net profit of approximately ₹5,183 crore, showcasing a 3% increase compared to the same quarter in the previous fiscal year. Simultaneously, the revenue is expected to surge to ₹17,425 crore, reflecting a 5% growth.
Positive Outlook on Diverse Business Segments
Cigarette Business and FMCG Growth
According to analysts, the key contributors to ITC’s positive performance are expected to be the consistent volume growth in both the cigarette and non-cigarette FMCG business. Despite challenges in the market, the cigarettes’ segment is projected to witness a 2% year-on-year growth with a 5-year average volume growth in mid-single digits.
Motilal Oswal, a prominent brokerage firm, notes, “The cigarette business continues to deliver volume growth and market share gains in the softening of competition from illicit trade.”
Hotels Segment Momentum
The hotels segment is poised for strong performance, driven by the anticipation of the wedding and festive seasons. Elara Securities forecasts an 8% year-on-year growth in the hotel business for the quarter. ITC aims to sustain this growth by capitalizing on rising average room rates (ARR) and occupancy rates, with plans to expand to 200 hotels with 18,000 keys in the next five years.
Agri Business and Paperboards Projections
ITC’s Agri business is expected to achieve a remarkable 10% year-on-year growth, influenced by the comparative impact of a ban on wheat and rice imports during the base quarter. Conversely, the paperboards segment may experience a 5% year-on-year decline due to weakened demand and price corrections. Kotak Institutional Equities report anticipates an EBIT margin of 17.5% for paperboards.
Financial Projections and Margin Expectations
The anticipated EBITDA for the quarter is expected to be around ₹6,482 crore, reflecting a year-on-year increase of approximately 4%. The EBITDA margin is projected to remain stable at 36.5%. Motilal Oswal forecasts a gross margin expansion of 230 basis points year-on-year and 50 basis points quarter-on-quarter, led by benign input prices.
“For Q3FY24E, we estimate a gross margin expansion of 230bp YoY and 50bp QoQ (ex-ITC, up 370bp YoY & 40bp QoQ), with an EBITDA margin gain of 30bp YoY but flat QoQ,” stated the brokerage firm.
Conclusion
In conclusion, ITC is expected to announce a strong financial performance for Q3, driven by growth in its key business segments. The positive outlook on the cigarette business, FMCG growth, hotels segment momentum, and Agri business’s stellar performance contributes to the overall optimistic projections. Investors and stakeholders await the official announcement to gauge the actual results and the company’s strategies for sustained growth.
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