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ITC Limited Q3FY25 Concoll Summary

 

ITC Limited


ITC Limited Q3FY25 Earnings Conference Call – Key Highlights

Overview

ITC Limited delivered a resilient performance in Q3FY25, navigating a subdued demand environment and elevated input costs. The quarter was marked by strong revenue growth in Agri Business, Hotels, and Cigarettes, supported by cost management initiatives and strategic pricing actions. A key structural change during the quarter was the demerger of the Hotels business into ITC Hotels Limited (ITCHL), effective January 1, 2025, with the new entity listed on January 29, 2025.

Financial Performance

  • Gross Revenue: ₹18,324 crore, up 8% YoY, led by strong performance in Agri Business, Hotels, and Cigarettes.
  • EBITDA: ₹6,174 crore, up 3% YoY; excluding Paper, up 4.5% YoY.
  • Profit After Tax (PAT): ₹5,287 crore, registering a 2.1% YoY growth.
  • Interim Dividend: ₹6.50 per share, recommended for the financial year ending March 31, 2025.
  • Input Cost Inflation: Significant cost increases in edible oil, wheat, potato, leaf tobacco, and wood, partially offset by cost optimization, pricing actions, and premiumization efforts.

Segmental Performance

FMCG – Others

  • Revenue: ₹5,316 crore, up 4.0% YoY despite sluggish demand. Excluding notebooks, growth stood at 5.2% YoY.
  • Growth Drivers: Atta (Aashirvaad), Spices, Snacks (Bingo!), Frozen Foods, Dairy, Premium Personal Wash (Fiama, Vivel), Homecare, and Agarbatti categories.
  • Challenges: Notebooks segment impacted by high base effect and aggressive local pricing due to falling paper prices.

FMCG – Cigarettes

  • Net Revenue: ₹7,716 crore, up 8.1% YoY, driven by volume growth and market interventions.
  • Segment PBIT: ₹4,712 crore, up 4.1% YoY.
  • Strategic Focus: Enhanced focus on premiumization and combating illicit trade, leveraging a diversified portfolio and improved distribution reach.

Agri Business

  • Revenue: ₹4,001 crore, up 9.7% YoY, led by strong Leaf Tobacco and Value-Added Agri exports (Coffee, Spices, etc.).
  • Segment PBIT: ₹520 crore, up 21.6% YoY, reflecting operational efficiency and customer-driven execution.

Paperboards, Paper & Packaging

  • Revenue: ₹1,872 crore, flat YoY as the segment faced multiple headwinds.
  • Challenges: Soft domestic demand, influx of low-cost Chinese & Indonesian imports, and sharp rise in wood prices.
  • Mitigation Strategy: Portfolio diversification, export market development, and cost-control measures.

Hotels (Discontinued Operations – ITCHL)

  • Revenue: ₹905 crore, up 14.6% YoY, marking the best-ever quarterly performance.
  • PBT: ₹216 crore, up 43.4% YoY, led by growth in Retail, Weddings, and F&B segments.
  • Strategic Move: The demerger of ITC Hotels into ITCHL aims to enhance operational agility and unlock shareholder value.

Strategic Initiatives & Business Developments

  • Cost Optimization: Stringent cost control initiatives to offset raw material inflation.
  • Market Investments: Sustained investments in brand building and competitive marketing strategies.
  • Manufacturing Expansion: Commissioned third Ancillary Manufacturing cum Logistics Facility (AMLF) in Panchla to improve cost efficiency and responsiveness.
  • Product Innovation: Launched premium products such as ‘Sunfeast Wowzers’, ‘Bingo! Popped Chips’, and ‘Fiama Japanese Hokkaido Milk Moisturizing Bars’ to strengthen the premiumization strategy.
  • Sustainability Initiatives:
    • Water Positive for 22 years
    • Carbon Positive for 19 years
    • Solid Waste Recycling Positive for 17 years
    • ‘AA’ MSCI-ESG Rating for 7 consecutive years

Macroeconomic & Industry Outlook

  • India’s Economic Environment:

    • Macroeconomic stability remains intact, though near-term growth momentum has moderated.
    • Sticky food inflation and sluggish urban consumption remain concerns.
    • Union Budget 2025’s measures to support rural consumption recovery are positive for FMCG demand.

  • Key Monitorables:

    • Wood Prices: Elevated domestic wood prices, exacerbated by cyclonic rainfall.
    • Illicit Cigarette Trade: The Track & Trace mechanism proposed in the Union Budget 2025 could help combat illicit trade.
    • Input Cost Inflation: Persistent price pressures in edible oil, wheat, maida, potato, cocoa, and packaging materials.

Conclusion

ITC Limited delivered steady revenue growth across key segments, navigating cost inflation and demand volatility through pricing actions, cost efficiencies, and premiumization. The demerger of ITC Hotels marks a strategic shift towards value unlocking, while robust execution in Agri Business, Cigarettes, and FMCG supports long-term growth. Going forward, cost controls, supply chain resilience, and brand innovation will remain crucial levers for sustaining profitability and market share expansion.

Disclaimer:
This summary is based on the provided transcript and does not constitute financial advice. Please conduct your own due diligence before making any investment decisions.

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