ITC Q2 Preview: Mid-single-digit revenue growth seen on subdued paper, agri biz

economictimes.indiatimes.com:

ITC is expected to post mid-single-digit revenue growth in the September quarter due to subdued performance in papers and agri businesses.

Revenue for the quarter is seen growing 4%, according to an average estimate of five brokerages. Net profit, meanwhile, is likely to rise by 8%.

Agri business is expected to decline by 5% year-on-year (YoY) as the impact of ban of wheat and rice exports played out.

The paperboard business could see a 3% YoY fall, mainly due to muted demand and price correction.

Sales from the cigarette business are seen growing anywhere between 6-8%, driven by 4-5% YoY growth in volumes.

ITC reported an 18% rise in its net profit to Rs 4,903 crore for the quarter ended June 2023. Revenue from operations declined by 8% YoY to Rs 15,828 crore in the same period.

Here's what analysts expect from ITC's Q2 numbers

Nuvama
We expect consolidated revenue to remain almost flat YoY (0.8% growth YoY) with YoY dip in sales in Agri and Paper.

We expect consolidated EBITDA/PAT to grow by 5%/9% YoY.

We expect cigarette sales and volumes to be similar on a QoQ basis. In Q1FY24, cigarette business grew 12.9% growth (on a base of 27.4% growth in Q2FY23).

Sales of FMCG business are expected to grow by 8% YoY, however, we expect margins for FMCG business to expand YoY.

Sales from hotel business is expected to grow by 11% YoY. Sales from paperboards, paper & packaging are expected to decline by 11% YoY, on account of steep deflation in pricing in value-added paper.

Motilal Oswal
We expect 6% YoY volume growth in cigarette with 5-year average volume growth in mid -single digit business.

We expect gross margin and EBITDA margin to expand 80 bp and 90 bp YoY, respectively. Watch out for hotels revenue growth and