Beating street estimates, cigarette-to-soap maker ITC on Friday reported a 21.05% year-on-year jump in its standalone net profit to Rs 5,031.01 crore for the third quarter this fiscal as all its business verticals contributed significantly to the overall profitability.
The diversified conglomerate’s gross revenue during the period under review, however, grew 2.93% year-on-year at Rs 17,122.15 crore, as the agri business vertical witnessed a 37% year-on-year fall in revenue due to restrictions imposed on wheat and rice exports.
The company had posted a Rs 4,156.20 crore net profit for the third quarter of FY22. During Q3FY23, its total expenses decreased by 5.48% year-on-year at Rs 11,459.68 crore, while tax expenses rose 23.56% year-on-year at Rs 1,646.51 crore, according to a stock exchange filing.
“Strong growth momentum sustained across operating segments,” ITC said in a statement, adding its gross revenue, excluding agri business, was up by 17.5% year-on-year during the third quarter this fiscal. And, Ebitda was up by 22% year-on-year.
During the quarter, revenue from the company’s cigarette business rose 16.72% year-on-year at Rs 7,288.22 crore, while operating profit from the segment increased 16.93% year-on-year at Rs 4,619.71 crore during the period, according to the stock exchange filing.
The company, the country’s largest cigarette maker, said segment PBIT was up by 16.9% year-on-year. “The business continues to reinforce market standing by fortifying the product portfolio through innovation, democratising premiumisation across segments and enhancing product availability backed by superior on-ground execution,” it said.
During the quarter under review, non-cigarette FMCG business registered an 18.35% year-on-year growth in its revenue to Rs 4,841.40 crore, while the segment posted a 43.92% year-on-year growth in operating profit at Rs 348.10 crore during this period.
Segment Ebitda margin was at 10% in the third quarter, which was up by 90 basis points year-on-year and 50 bps quarter-on-quarter. “The FMCG businesses witnessed strong growth across channels and markets (both urban and rural) driven by ramp-up in outlet coverage, enhanced penetration and superior last mile execution.
Overall, input costs remained elevated even as some commodities witnessed sequential moderation in prices,” the company said, adding that the businesses continued to drive improvement in profitability through multi-pronged interventions viz. strategic cost management, premiumisation, supply chain agility, judicious pricing actions, fiscal incentives, leveraging digital and optimising channel assortments. Modern trade sales accelerated with higher store footfalls and joint business planning with key accounts.
Hotels business posted a 50.49% year-on-year increase in its revenue at Rs 712.39 crore, while the segment posted close to three-fold jump in operating profit at Rs 146.15 crore. Segment Ebitda margin for the quarter stood at 31.5%. Margin expansion was driven by higher revenue per available room (RevPAR), operating leverage and structural cost interventions. According to the company, RevPAR was ahead of pre-pandemic levels, driven by Retail (packages), Leisure, Weddings and MICE (Meeting, Incentives, Conferences and Exhibitions).
Although the company’s agri-business segment’s revenue decreased by 37.05% year-on-year at Rs 3,123.77 crore during Q3FY23, operating profit increased by 32.57% year-on-year at Rs 391.47 crore. Segment PBIT was up by 32.6%, driven by growth in leaf tobacco exports and value-added agri products. During the quarter, the agri-business vertical commissioned its new value-added spices processing facility in Guntur. ITC’s board recommended an interim dividend of Rs 6 per share for the financial year ending March 31, 2023. On Friday, the company’s scrip on BSE closed 0.50% higher at Rs 380.50 apiece. It declared the quarterly results after the end of trading hours.