News

Published: October 19, 2023
Updated: October 19, 2023

ITC's Q2 Results Showcase Robust Growth in Key Segments

In the world of corporate financials, ITC, a major player in the fast-moving consumer goods (FMCG) industry, has recently unveiled its results for the second quarter of fiscal year 2023- 24 (Q2FY24). The company's performance has been nothing short of impressive, marked by a substantial increase in net profit and revenue. This article provides an in-depth analysis of ITC's Q2 results, highlighting key segments that contributed to its growth.

Stellar Financial Performance

ITC's Q2 results for 2023-24 have exceeded expectations. The company's standalone net profit surged by 10.3% to reach ₹4,927 crore, a substantial increase from ₹4,466 crore during the same period in the previous year. Revenue from operations also exhibited a healthy growth trajectory, climbing by 2.6% to reach ₹16,550 crore.

A Significant Milestone: The Demerger of ITC Hotels

These impressive results come on the heels of a momentous decision by the company. The ITC Board had approved the demerger of ITC Hotels in August, making this the first earnings report following that historic move.

A Closer Look at Key Segments

ITC's success in Q2 is not uniform across all its business segments. Let's delve into the standout performances:

1. Agri Segment Business

Revenue Surges: The Agri Business Segment witnessed remarkable growth, with a revenue increase of 26.4% year-on-year (excluding wheat and rice exports). This surge can be attributed to the success of Value Added Agri products and Leaf Tobacco.

Concerns and Limitations: However, the business is not without its challenges. Geopolitical tensions and climate emergencies are raising concerns about food security and food inflation, while trade restrictions imposed by the government on agri commodities are limiting business opportunities for this segment.

2. FMCG Business Growth

Steady Expansion: ITC's FMCG - Others segment continued to show robust performance, with revenue up 8.3% year-on-year, even on a high base. The segment's EBITDA margin expanded by 150 basis points year-on-year to 11%.

Driving Factors: Growth in Atta, Spices, Personal Wash, and Agarbatti played a pivotal role, despite a relatively subdued consumer demand environment.

3. Hotels Business

Record Performance: ITC's hotels business delivered a stellar performance, with a 21% revenue increase on a high base.

Margin Expansion: The segment's EBITDA margin rose by 170 basis points year-on-year, reaching 30.7%. This growth was driven by higher RevPAR, structural cost interventions, and operating leverage.

Global Recognition: ITC Hotels received global recognition for exclusively curating and serving from the best of India's culinary heritage at the G20 summit in New Delhi, which included hosting the President of the United States and the entire US delegation.

4. Cigarettes Segment Resilience

Net Revenue Growth: The Cigarettes Segment displayed resilience, achieving an 8.5% increase in net segment revenue year-on-year.

Market Standing Reinforced: Sustained volume recovery from illicit trade and effective portfolio/market interventions, along with agile execution, strengthened the segment's market standing.

Appointment of Non-Executive Director: The board of ITC also recommended the appointment of Mr. Rahul Jain as a Non-Executive Director of the company, effective from January 1, 2024. ITC's Q2 results are a testament to its strategic prowess and resilience. The company's performance across key segments is an encouraging sign of growth and adaptation, despite the complex and dynamic market environment. As ITC continues to navigate the ever- changing landscape, these results reflect its capacity to capitalize on opportunities and strengthen its position in the industry.