ITC Q1 Results 2022: Profits Rise 34% Beat Estimates

ITC reported its quarterly results on Monday evening after market hours and reported a net profit increase, which was higher than estimates. On Tuesday morning, the share was trading at Rs 316.05, up 2.78%. The ITC share has given impressive returns in 2022. It has gained over 44.25% so far.

ITC Q1 Results 2022: Key Highlights

• Revenue: Rs 18,489.45 crore, up 29.83% YoY
• Profit: Rs crore, up 33.97% YoY
• Operating profit: Rs 5,646.10 crore, rose 41.5% YoY

Let us look at the Q1FY23 numbers of ITC in detail:

ITC Q1 FY23 Results: Revenues Rise

ITC’s gross revenues increased 29.83% on year to Rs 18,489.45 crore in Apr-Jun 22 period. The company had posted a revenue of Rs 14,240.76 crore in the corresponding period last year. The cigarette segment, the maximum contributor in revenue, reported a 29% year-on-year rise in topline. The revenue is higher than Street estimates of Rs 15,044 crore.

ITC Q1 Results 2022: Profit Beats Estimates

ITC’s net profit jumped 33.97% year on year to Rs 4,389.76 crore in the quarter ended June. Analysts had earlier anticipated a net profit of about Rs 3,985 crore. In the year-ago period, ITC reported a net profit of Rs 3,014 crore. Sequentially, the revenue was up 4.6% from Rs 4,196 crore.

ITC Q1 FY23 Results: Margins Stable

Operating profit rose 41.5% year on year to Rs 5,646.10 crore, higher than the street estimate. Segment PBIT margin (ex-Agri Business) was up by 245 bps to 36.9% despite unprecedented inflation in commodity prices. The margin for the June quarter stood at 32.7%. 

ITC Q1 Results 2022: Segment-wise Performance 

FMCG - Others

The FMCG-others segment saw a 19.5% year-on-year rise in revenues and stood at Rs 4,451 crore. The company reported strong growth in Out-Of-Home categories while staples and convenience foods posted resilient numbers. The Education and Stationery Products Business continued to perform well this quarter. Q1FY23 Segment EBITDA margins sustained despite commodity inflation and sharp escalation in input costs. Margins have expanded by 190 bps.

Cigarette: Mainstay business

ITC saw robust recovery across markets aided by an agile supply chain and market servicing and an increase in mobility. The segment revenue was up 29%, and segment results were 30.1%. Stability in taxes on cigarettes and deterrent actions by enforcement agencies enables green shoots of volume recovery for the legal cigarette industry from illicit trade. It helped increase in domestic demand for Indian tobaccos while mitigating the loss of tax revenue to the exchequer. 

Hotel

Hotels reported stellar performance across the location. ARR and Occupancy ahead of pre-pandemic levels driven by Retail (packages), Weddings, Leisure, and MICE segments. ITC reported that its ITC Narmada is expected to be commissioned shortly. It is a luxurious 291-key property in the city of Ahmedabad. Segment revenue stood at Rs 554 crore in Q1FY23 compared to Rs 128 crore in the year-ago period. Segment EBITDA stood at Rs 180 crore, up Rs 268 crore year-on-year.

Agri-business

Agribusiness registered revenue of Rs 7,473 crore, as against Rs 4,091 crore in Q1FY22. The sharp growth in the segment revenue was driven by rice, wheat, and leaf tobacco exports leveraging strong customer relationships, a robust sourcing network, and agile execution. The business continues to make steady progress toward rapidly growing its value-added portfolio to enhance value capture.

Paper & Paperboards

Paperboards, paper, and packaging revenue stood at Rs 2,267 crore in the first quarter as against Rs 1,583 crore in the same period last year. Segment Revenue growth was driven by continued strong demand across exports and end-user segments. The packaging and Printing Business witnessed robust growth in domestic and export segments across Cartons & Flexibles platforms. 

ITC Q1 FY23 Earnings: Analysts' Views

Jefferies: The firm has maintained a BUY call for ITC shares but has increased the target price to Rs 360 per share against Rs 305 earlier. As per the firm, the Q1FY23 result was strong with exceptional performance in hotels & paperboards, along with a slight beat in cigarettes - FMCG expectedly faced margin pressure.

Motilal Oswal: The Indian brokerage firm has given a BUY rating on the stock with a target price of Rs 355 per share. The firm has turned constructive on the stock led by a better than expected demand recovery and a healthy margin outlook in Cigarettes, lower drag from the Hotel business, robust sales momentum in the FMCG business, and better capital allocation in recent years.