FMCG giant ITC is all set to announce its third quarterly financial results on Monday, January 29. According to analysts, the cigarettes’ to hotels conglomerate is likely to benefit from consistent volume growth in both its cigarette and non-cigarette FMCG business, complemented by robust momentum in the hotels segment, which is expected to contribute to the company’s earnings for the quarter ending in December.
The conglomerate is likely to post a net profit of approximately ₹5,183 crore for the current quarter, reflecting a 3 percent increase compared to the corresponding quarter in the previous fiscal year, as per analysis by several brokerage firms. Concurrently, revenue is anticipated to experience growth, reaching ₹17,425 crore.
Also read: Bajaj Finance Q3 results: NII likely to rise 26% led by strong AUM growth, say analysts
The anticipated EBITDA is expected to hover around ₹6,482 crore, reflecting a year-on-year increase of approximately 4 percent. The EBITDA margin is projected to remain stable on a quarterly basis, maintaining a rate of 36.5 percent.
Segment-wise performance
According to brokerage firm Motilal Oswal, the FMCG giant is expected to report a 2% year-on-year (YoY) growth in cigarettes’ with 5-year average volume growth in mid-single digits.
“The cigarette business continues to deliver volume growth and market share gains in the softening of competition from illicit trade,” the firm said.
The brokerage firm Elara Securities projects that the hotel business is poised for strong performance in anticipation of the wedding and festive seasons and is likely to grow around 8% YoY.
“ITC is set to sustain robust growth in its hotels business, capitalizing on rising average room rate (ARR) and occupancy rate. The company targets expansion to 200 hotels with 18,000 keys in the next five years via a managed portfolio which accounts for two-thirds of keys,” it said.
Meanwhile, its Agri business is projected to achieve a 10% year-on-year growth, influenced by the comparative impact of a ban on wheat and rice imports during the base quarter. Conversely, paperboards may experience a 5% year-on-year decline due to weakened demand and price corrections, with an anticipated EBIT margin of 17.5%, as per Kotak Institutional Equities report.
“For Q3FY24E, we estimate a gross margin expansion of 230bp YoY and 50bp QoQ (ex-ITC, up 370bp YoY & 40bp QoQ), with an EBITDA margin gain of 30bp YoY but flat QoQ (ex-ITC, up 90bp YoY & down 50bp QoQ), led by benign input prices, partly offset by higher spend on advertising. We expect our FMCG universe to post EBITDA growth of 6.2% YoY (ex- ITC growth of 9.5% YoY). Barring ITC and BRIT, which could experience a decline in EBITDA margin, our coverage companies are expected to achieve margin expansion,” said the brokerage firm.A
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Published: 28 Jan 2024, 06:59 PM IST