Thursday, September 28, 2023

ITC’s net up 33% in Q1 on a strong show in the cigarette, hotel and agri segments

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  • ITC reported a net profit of ₹4,389 crore, a growth of 33% from last year.
  • The hotel segment was the outlier with revenues tripling, as bookings bounced back to pre-pandemic levels.
  • However, ITC remains cautious due to the effects of high inflation on consumer spending, especially in rural areas.

ITC’s net profit for the April-June quarter grew 33% to 4,389 crore compared to ₹3,276 crore in the same quarter last year, surpassing street estimates. Total operating income increased by 39% year-on-year to 19,831 crore from ₹14,240 crore last year.

The ITC Hotels segment was the outlier as it more than tripled in revenue in the June quarter. Thanks to weddings and holidays, bookings returned to pre-pandemic levels. Business travel also resumed, contributing to growth.

“Average room rate (ARR) and occupancy rates are above pre-pandemic levels, driven by the retail (packages), leisure, wedding and MICE segments. Domestic business travel continues to witness a gradual normalization. However, inbound overseas travel remains well below pre-pandemic levels,” ITC said in a press release.

Segment Revenue Q1 FY23 Q1 FY22 % Modify
Total FMCG (including cigarette biz) ₹11,922 crore ₹9,534 crore 25%
Hotels ₹580 crore ₹133 crore 336%
agricultural affairs ₹7,492 crore ₹4,109 crore 82%
Cardboard, paper & packaging ₹2,267 crore ₹1,582 crores 43%
others ₹735 crore ₹680 crore 8%

Although ITC has 13 businesses in five segments, much of its revenue comes from the cigarette business, which also grew 29% year-over-year. The recent launches such as Classic Connect, Gold Flake Indie Mint, Gold Flake Neo SMART Filter, Capstan Excel etc. also performed well.

FMCG also saw growth in out-of-home categories such as Sunfeast Biscuits, Sunrise Spices, Aashirvaad Salt and Aashirvaad Svasti Dairy products.

However, ITC remains cautious due to high inflation and its impact on consumer spending, especially in rural areas.

“Economic activity continued to gain momentum over the quarter with a pick-up in business and consumer confidence. However, geopolitical tensions and ongoing supply chain disruptions resulted in commodity prices hardening, exacerbating unprecedented inflationary conditions in the economy. Inflationary headwinds also manifested themselves in subdued consumer spending, with volumes coming under pressure, particularly in rural markets,” ITC said.

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