In Short:
ITC reported a 3.1% increase in standalone net profit to ₹5,078.34 crore for Q2, driven by a 16% rise in revenue, reaching ₹20,359.95 crore. Challenges included high costs, subdued demand, and severe weather. The cigarette business grew by 6.78%, while the non-cigarette FMCG segment rose by 5.41%. The hotels and agri sectors also saw significant revenue growth, with strong hotel performance at 20.16%.
ITC Surprises with Impressive Q2 Results
In a thrilling revelation that exceeded expectations, **ITC**, the diversified powerhouse hailing from Kolkata, announced an impressive standalone net profit of ₹5,078.34 crore for the second quarter of this financial year. This marks a growth of about 3.1% compared to the same period last year, driven by a **16% rise** in gross revenue.
Year-on-Year Growth
To put things in perspective, this profit is a notable increase from **₹4,926.96 crore** reported during the previous year’s Q2. The figures reflect not just resilience but a robust business performance during challenging times.
Driving Factors Behind Revenue Surge
For the period spanning July to September, **ITC’s gross revenue from sales** saw a significant leap to ₹20,359.95 crore, up from ₹17,548.75 crore in the same timeframe of the previous year. This remarkable growth can be attributed to strong performances in its **agriculture** and **hotel** businesses.
A Challenging Environment
Despite these promising numbers, **ITC** acknowledged the hurdles they faced. In a recent media release, the company noted their impressive performance amid a tough operating landscape that included sluggish demand, extreme weather conditions, soaring food inflation, and escalating input costs.
Rising Costs
The company’s total expenses saw a sharp increasе of **20.30%**, totaling ₹14,661.29 crore. Additionally, the costs associated with materials consumed surged by **13.45%**, reaching ₹6,098.77 crore, according to their stock exchange filings.
Cigarette and FMCG Business Highlights
In the cigarette division, revenue climbed by **6.78%** to ₹8,177.27 crore, with operating profit growing around **5%** to ₹5,023.35 crore. This growth reflects careful management amid rising costs for leaf tobacco, which were somewhat offset by strategic pricing and cost management tactics.
On the other hand, the **non-cigarette FMCG** sector also demonstrated resilience, growing revenue by **5.41%** to ₹5,577.73 crore. Operating profit for this segment increased slightly from ₹438.60 crore to ₹441.80 crore. However, the adverse impact of **heavy rains** and flooding affected sales, particularly in discretionary consumption categories.
Insights into Market Challenges
Muted Demand Conditions
This quarter brought inflationary pressures across various critical inputs like edible oil, wheat, and potato, which **ITC** addressed candidly in their report. The company noted, “Competitive intensity remains high in categories such as noodles and snacks.” Nonetheless, their agility in innovation and new product launches helped them navigate these muted demand conditions.
Other Business Segments
Revenue from the **Hotels segment** saw a healthy **12.05% increase** to ₹727.65 crore, with operating profits up by **20.16%** to ₹151.19 crore. Meanwhile, the **agricultural business** segment shined brightly, with revenue skyrocketing **47.05%** to ₹5,780.51 crore and operating profit soaring by **27.49%** to ₹454.72 crore.
However, not all segments enjoyed growth. The **Paperboards, Paper, and Packaging** segment experienced only a slight rise of **2.14%** in revenue to ₹2,114.09 crore. Yet, it faced challenges with operating profit dipping by **23.22%** to ₹242.47 crore, primarily due to subdued realizations and rising domestic wood prices.
Final Thoughts
As these mixed results reveal, **ITC** continues to navigate a complex economic landscape, showcasing remarkable agility and strategic foresight. Their ability to adapt amidst adversity will be crucial as they move forward in this dynamic market.
