ITC, the company behind Gold Flake cigarettes and Bingo chips, saw its profit for the fourth quarter dip by 1.3% due to sluggish demand. Despite revenue from operations growing by 1.4% to ₹17,752.87 crore, certain sectors like agriculture and paperboards faced declines. However, the revenue surpassed Street estimates.
Expenses for the company rose by 2.4% to ₹12,017.71 crore compared to the previous year.
Optimism for Rural Market Recovery
The company anticipates a recovery in rural demand, aligning with forecasts made by NIQ in its March quarter commentary. It noted that rural markets outpaced urban markets for the first time in 15 months.
Although consumption demand remained subdued in Q4 FY24, the company remains optimistic about the near-term revival in consumption demand due to improving macro-economic indicators and signs of recovery in rural demand.
For the full year, ITC’s gross revenue remained unchanged at ₹69,446.20 crore, while profit increased by 8.9% to ₹20,422 crore. The company attributed this partly to reassessing its provisions related to uncertain tax positions based on a favorable Supreme Court order, resulting in a credit of ₹468.44 crores in the current tax expense for the year.
ITC’s FMCG Segment Shows Resilience
In the FMCG segment (excluding cigarettes), revenue increased by 7.1% to ₹5,300.17 crore in the quarter, driven by staples, biscuits, snacks, dairy, homecare, and incense sticks. For the full year, this segment grew by 9.6% year-on-year to ₹20,966.83 crore.
However, the company observed a sequential increase in certain commodity prices and acknowledged high competitive intensity, including from local or regional players in certain categories.
Revenue from cigarettes rose by 7% to ₹7924.84 crore, exceeding Street estimates, with profit before interest and tax up by 5% year-on-year.
Meanwhile, revenue for the agriculture business declined by 13.3% year-on-year to ₹3101 crore in the March quarter due to challenges in the operating environment and trade restrictions imposed by the government on agri commodities.
Additionally, the National Company Law Tribunal (NCLT) has directed a meeting of shareholders of ITC on 6 June, 2024, to consider and approve the demerger of ITC Hotels Ltd from ITC Ltd.
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