ITC Q3 results: Net profit drops 7.5% to Rs 4,935 crore, revenue rises 8%

Early signs of recovery in urban demand, says ITC

Diversified conglomerate ITC on Thursday reported a 7.51 per cent year-on-year (Y-o-Y) drop in consolidated net profit to Rs 4,935 crore in the third quarter of the current financial year (Q3FY25) amid a subdued demand environment and sharp escalation in input costs. The company, however, pointed to early signs of recovery in urban markets even as rural markets continued to witness a growth momentum.

 

“With improving agri terms-of-trade, healthy kharif output, and improvement in rabi sowing, rural consumption is expected to build on the gradual recovery momentum witnessed in recent months; there are incipient signs of recovery in urban demand as well,” the company stated in a release.

 

The company had recorded a net profit of Rs 5,335 crore in the year-ago period. Sequentially, the company’s net profit fell 1.16 per cent, while missing Bloomberg estimates of Rs 5,299 crore.

 

The maker of Gold Flake cigarettes and Sunfeast biscuits reported a 7.7 per cent rise in revenue to Rs 20,350 crore from Rs 18,880 crore in the same period last year. The revenue net of excise saw a 7.9 per cent increase to Rs 18,790 crore.

 

Its profit before interest, depreciation, and tax (PBIDT) rose 30.26 per cent to Rs 8,964 crore.

 

“Anticipated moderation in inflation, uptick in government spending and private investments, and the government's thrust on public infrastructure and the rural sector augur well for boosting economic activity and a pick-up in consumption demand,” added the release.

 

The cigarettes segment recorded a 7.8 per cent Y-o-Y increase in revenue to Rs 8,944.83 crore, while the non-cigarette FMCG (fast moving consumer goods) business recorded a 4 per cent Y-o-Y growth in revenue to Rs 5,427.70 crore driven by atta, spices, snacks, frozen snacks, dairy, premium personal wash, homecare, and agarbatti. The company pointed out severe inflationary pressures in prices of edible oil, wheat, maida, potato, cocoa, and packaging inputs, etc., which was “partially mitigated through focused cost management initiatives, calibrated pricing actions and premiumisation”, the company said.

  The agri business segment revenue at Rs 3,626.01 crore was up by 10.7 per cent Y-o-Y, led by leaf tobacco and value-added agri products.  

The company’s demerged hotels business reported a 14.6 per cent Y-o-Y rise in revenue to Rs 922 crore, driven by growth in retail, weddings, and food & beverages segment.

 

In line with its “asset right” strategy, five managed properties with 330 keys were operationalised during the quarter.

 

The hotels business was reported as “discontinued operations” in the financial update in line with applicable Indian Accounting Standards.

 

ITC to acquire frozen food player Prasuma

 

ITC on Thursday announced that it has signed definitive agreements to acquire a 100 per cent stake in frozen food player Prasuma over the next three years, in a bid to strengthen its position in the chilled, and ready-to-cook foods portfolio valued at over Rs 10,000 crore.

 

The first tranche of 43.8 per cent stake shall be acquired upfront for Rs 131 crore, to be completed by March 31, 2025. Secondary purchases of Rs 56 crore will be made based on pre-agreed pre-money valuation, taking the company’s equity stake to 62.5 per cent, expected to be completed by April 2027.

 

The balance stake will be acquired by June 2028, basis pre-defined valuation criteria and subject to other conditions as stated in the definitive agreements.

 

Prasuma operates through Prasuma, Meatigo by Prasuma, and Prasuma Momo Kitchen brands. ITC entered the frozen foods market in 2019 under its Master Chef brand.

 

“With the industry at an inflection point, this acquisition will help strengthen and expand ITC’s presence in the aforesaid categories by gaining entry into high-growth segments, viz. pan-Asian foods, deli meats, etc. With the proposed acquisition, ITC will become the first full stack player in the segment with an unparalleled portfolio, offering meals and snacking options across multiple occasions throughout the day,” the company stated in a release.