ITC shares gain ahead of Q1 results; here's earnings preview

Shares of ITC Ltd were trading higher ahead of the FMCG giant's June quarter results scheduled for later in the day. The cigarette maker is expected to report a flattish profit for the June quarter on a 4-5 per cent rise in sales. Volume may stay flat while realisation may improve, analysts said.  

HSBC said ITC’s Q1 trends remain relatively stable. The Cigarettes business could see mid-single digit revenue growth, but Ebitda growth could be lower as high-cost inventory continues to be consumed with lower leaf tobacco prices likely aiding margins in H2FY26.

"The FMCG business could begin some gradual recovery on a somewhat low base of c6 per cent growth in Q1FY25 and c4 per cent growth in Q4FY25. We expect mid- to high-single digit revenue growth, but the EBITDA decline could continue as margins remain under pressure around Q4FY25 levels of c9 per cent. Overall, we expect revenue growth of c5 per cent and Ebitda growth of c2 per cent YoY.

PL Capital sees Q1 adjusted net profit at Rs 4,977.20 crore, up 1.2 per cent YoY over Rs 4,920.50 crore in the same quarter last year. Sales are seen growing 4.5 per cent YoY at Rs 16,029 crore against Rs 15,339 crore in the corresponding quarter last year. Ebitda is seen at Rs 3,654 crore while Ebitda margin is estimated at 22.8 per cent, down 71 basis points.

"We expect another muted quarter with flat volume growth and 4 per cent realisation growth. Margins are expected to contract," it said.

ITC shares were trading at Rs 417.70, up 1.43 per cent.

Axis Securities expects ITC to report 4.8 per cent rise in profit at Rs 5,155 crore on 9.7 per cent YoY rise in sales at Rs 18,501 crore. This brokerage sees high revenue growth as it estimated cigarette segment growing at 6 per cent  YoY (5 per cent volume). Axis Securities sees FMCG segment growth at 4 per cent YoY, and Agri growth at 8 per cent. Papers segment earnings are seen declining 6 per cent YoY on account of weak demand conditions due to cheap Chinese supplies.

Analysts noted that Kolkata-based company is currently reeling under all round pressure led by high leaf tobacco price impact on cigarette margins, slow demand and high input cost pressure impacting FMCG margins and 3) significant decline in Paper and paperboard EBIT margins from normal level of 19-21 per cent to current 9.5 per cent led by high costs of wood and significant dumping (China, Korea and Indonesia) impacting end product prices.