ITC to share Q3 results today: Profit may rise up to 7%; cigarette volume growth seen moderating, hotels biz to do well

ITC Ltd is likely to report up to 7 per cent year-on-year (YoY) rise in net profit for the December quarter on 5-8 per cent YoY rise in sales. The cigarette volume growth is seen in the 2-5 per cent range against a 4 per cent growth in the September quarter and a high base of 16 per cent growth in the year-ago quarter. Margin is seen contracting YoY. Analysts said hotels business may do well. Rural weakness and a delayed festival season would have a negative impact but distribution thrust would aid growth, they said.

Emkay Global expects ITC to report a 7 per cent YoY rise in net profit at Rs 5,373.80 crore compared with Rs 5,031 crore in the same quarter last year. It expects sales for ITC to rise 8 per cent YoY to Rs 17,498.40 crore against Rs 16,225.70 crore

"For the cigarettes business we see 8 per cent net sales growth with 4-5 per cent volume growth. Overall net sales growth to be 8 per cent for Q3FY24. Raw material inflation to have a bearing on EBIT delivery; we see 20 bps YoY contraction in EBIT margin to 73.8 per cent. EBIT growth is likely to be 8 per cent," it said.

For other FMCG businesses, Emkay sees 10 per cent sales growth. For the paper business, it sees 5 per cent revenue decline, affected by weak realizations amid low-priced Chinese supplies impacting global pulp prices. Agribusiness is likely to grow 12 per cent YoY, aided by a better mix. Hotels’ EBIT margin would see healthy expansion of 350 bps YoY to 24 per cent, it said.

Motilal Oswal said it sees volumes growth for cigarettes segment at 2 per cent YoY against a 5-year average volume growth of mid-single digit.

"We expect gross margin to decline 150 bps YoY and Ebitda margin to fall 110 bps YoY on a high base.

Hotel business is likely to outperform ahead of wedding and festive seasons. Outlook on the other FMCG, Agri and paper & packaging will be key monitorables," it said.

This brokerage see profit at Rs 5,073 crore, up 0.8 per ecnt. It sees sales rising 5.7 per cent at Rs 17,156 crore.

Prabhudas Lilladher said cigarette volumes for ITC may grow 3 per cent on account of high base and impact of cyclone in strategic markets of south India. The Hotels segment, it said, is expected to show strong growth while FMCG will sustain margin expansion in a tough demand environment.

ITC is expected to deliver revenue growth of 4 per cent, it said while suggesting Ebitda margins at 38.4 per cent. Adjusted profit after tax is expected to grow 5.2 per cent YoY at Rs 5290 crore, the domestic broking firm said.

"Cigarette volume growth to moderate, as consumers cut down on discretionary spends. FMCG business growth to moderate as pricing anniversaries. Paper to see significant correction in overall pricing

Ebitda margin to may decent swing owing to improved sales mix, benefits of integrated manufacturing facilities," PhillipCapital said. This brokerage sees profit and sales rising 4.5 per cent, 3.3 per cent, respectively.

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