ITC’s 1QFY19 sales, EBITDA and net profit grew 13.5% (adjusted
for output taxes), 12.2% and 10.1% to INR107bn (net of taxes barring NCCD), INR42bn and INR28.2bn respectively. EBITDA was 5% higher than the estimate and net profit was 2% higher led by better performance in Cigarettes (EBIT grew 8.7% vs JMFe c.6%). Net profit growth (+10.1%) trailed EBITDA growth (+12.2%) due to a sharp 15% decline in financial income.
- Hotels grew 11.9% and profit more than doubled (off a very weak base, though) helped by higher room rates.
- Agri sales grew 14% but EBIT declined 17% due to adverse mix as topline growth was led more by lower-margin commodities while higher-margin leaf tobacco remained under pressure.
- Paperboards revenue was flat as it remained impacted by weak demand in source industries and overcapacity in the country.
- EBIT still grew 15% from benefits of strategic investments in imported pulp substitution, improved pulp yield and better sales mix.
- The rise in the bottom line was driven by growth in its non-cigarette businesses on the back of a favourable base and improved realisations from cigarettes.
- ITC’s entry in new FMCG categories and impetus to accelerate growth in existing categories would increase profitability.
How it fairs among the peers?
Stock to be impacted?
Company’s Non-cigarette business is showing strong performance after every quarter and is positive for the company (CMP 280, M. Cap 3,66,754 crores, 24.7 FY20 PE).