ITC Q2 Results

ITC Q2 FY25 Financial Performance: Revenue Up 17%, Profit Rises 3% Amid Market Challenges

ITC Ltd. revealed a 3% year-over-year increase in net profit for Q2 FY25, totaling ₹5,078.3 crore compared to ₹4,927 crore in the previous fiscal. The tobacco-to-hotels conglomerate also reported a 17% jump in revenue from operations, amounting to ₹19,327.8 crore, against ₹16,550 crore in Q2 FY24.

Despite facing subdued demand, high input costs, and unprecedented rainfall impacting agriculture, ITC’s diverse business portfolio supported strong revenue growth across agri-business and hotels. Here’s a closer look at ITC’s Q2 performance and the strategies that bolstered growth in challenging market conditions.

Key Financial Highlights

P&L Account Analysis

ITC’s expenses surged by 21%, totaling ₹16,056.86 crore, while total income rose to ₹22,897.85 crore, compared to ₹19,934.9 crore in Q2 FY24. Notably, ITC faced increased raw material costs and weather-related disruptions, impacting margins.

EBITDA: ITC’s EBITDA rose by 5% to ₹6,335 crore, with a margin decline of 370 basis points to 32.8% from 36.5%, reflecting cost pressures.

FMCG and Cigarette Business Performance

ITC’s FMCG segment, including the cigarette business, saw a 6.1% rise in revenue to ₹14,463.15 crore. Cigarette revenue alone increased by 6.6%, reaching ₹8,877.86 crore. ITC’s innovative product launches in the FMCG segment showcased resilience in challenging market conditions, as consumer demand slowed.

Hotel and Agribusiness Expansion

Hotels: Revenue grew by 17% to ₹789.16 crore, driven by robust demand in F&B, retail, and the wedding industry. Strategic cost management resulted in improved EBITDA for the Hotels segment.

Agribusiness: Revenue rose 46.57% to ₹5,845.25 crore, propelled by strong leaf tobacco exports and increased sales in the value-added agri-products category.

Consolidation in Hospitality Investments

ITC announced plans to consolidate its holdings in Oberoi and Leela hotel chains, acquiring shares held by subsidiary Russell Credit Ltd. Post-acquisition, ITC’s ownership in EIH Ltd and HLV Ltd will stand at 16.13% and 8.11%, respectively, advancing ITC’s strategic position in the hospitality sector.

Management and Leadership Update

ITC’s Board recommended appointing Siddhartha Mohanty as Non-Executive Director representing LIC, effective January 2025. Shares closed at ₹471.85, down 1.81%, ahead of the results announcement.

Conclusion

ITC’s Q2 FY25 results underscore the company’s resilience and adaptability, with significant contributions from its diversified portfolio, despite challenging macroeconomic factors. The company’s growth across FMCG, agribusiness, and hotels highlights its strategic agility, positioning ITC to sustain long-term value creation.

FAQs

1.What was ITC’s Q2 FY25 net profit growth?

A. ITC reported a 3% increase in net profit, reaching ₹5,078.3 crore in Q2 FY25.

2.How much did ITC’s revenue from operations grow in Q2 FY25?

A. ITC’s revenue from operations grew by 17%, totaling ₹19,327.8 crore for the quarter.

3.Which segments drove ITC’s Q2 growth?

A. ITC’s agri-business and hotels segments contributed significantly to its Q2 revenue growth.

4.What challenges impacted ITC’s margins this quarter?

A. High raw material costs, weather disruptions, and slowing demand affected ITC’s operating margins.

5.How did the FMCG segment perform in Q2 FY25?

A. FMCG revenue grew 6.1%, driven by new product launches and the cigarette business.

6.How did the hotel segment perform?

A. The Hotels segment saw a 17% revenue increase due to high demand in F&B, retail, and weddings.

7.What is ITC’s shareholding in Oberoi and Leela chains?

A. ITC will hold 16.13% in EIH Ltd and 8.11% in HLV Ltd after consolidating its holdings.

8.What is ITC’s EBITDA margin for Q2 FY25?

A. ITC’s EBITDA margin decreased by 370 bps, reaching 32.8% due to increased costs.

9.Who will represent LIC on ITC’s Board?

A. Siddhartha Mohanty will join as a Non-Executive Director representing LIC starting in 2025.

10.How did ITC’s agribusiness segment perform?

A. The agribusiness segment rose 46.57% in revenue, led by strong leaf tobacco exports.

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