ITC Q4 Preview: Revenue to grow around 3% YoY; margins to contract

revenues are expected to rise marginally, with volumes staying, while non-cigarette is seen growing about 6-7% year-on-year.

will likely continue to do well and is expected to grow 15-16% year-on-year, aided by sustained strong demand. might clock a dip year-on-year due to restrictions on exports of rice, wheat.

In the preceding December quarter, reported 6% growth in its to Rs 5,335 crore and revenue from operations increased 2% year-on-year to Rs 19,484 crore.

Here's what analysts expect from ITC'S March quarter performance:



Gross margin is expected to be lower by 40 bps year-on-year, while OPM is likely to contract 140 bps year-on-year due to higher other expenses.

PAT is expected to grow 1.7% year-on-year, largely in line with flat operating .



The brokerage sees revenue/EBITDA dipping 1%/0.9% year-on-year, but PAT is anticipated to grow 3% year-on-year. The cigarette sales is expected to grow 3.4% year-on-year (with flat volumes). Four-year CAGR in cigarette volumes may stay healthy at 3–4%.

Q4FY24 had a normal base unlike Q3FY24. Q3FY24 cigarette volumes had dipped 2% year-on-year on a high base (Q3FY23 volume grew 15% and Q3FY23 clocked 5% quarter-on-quarter growth primarily due to inventory pile up on expectation of a tax hike in Budget).

FMCG Others is estimated to grow 6% year-on-year led by pricing, with volume growth in low single digits year-on-year. The brokerage expects EBIT for FMCG Others to stay flat quarter-on-quarter, but likely to dip year-on-year as the base quarter had high fiscal incentives, which were bunched up.

Paper sales continue to be under pressure and are likely to dip 6% year-on-year with flat margins quarter-on-quarter but down year-on-year.



The brokerage expects cigarette volume growth to improve to remain flat year-on-year, translating into 4.7%/3.8% year-on-year growth in gross/net cigarette sales. It sees cigarette EBIT growth of 3.5%, marginally below net revenue growth.

In the FMCG segment, the firm estimates 7.7% year-on-year revenue growth with no major sequential price adjustments and 130 bps quarter-on-quarter expansion in EBIT margin to 9.6%. It’s important to note that the EBIT margin of 10.1% in March 2023 quarter had some benefit from PLI. The firm expects robust 16% growth in hotels.

Agri business is expected to decline 13% year-on-year while paperboards could decline 6% year-on-year and report EBIT margin of 14.1%.



The firm expects flat year-on-year volume growth in cigarettes business and estimates gross margin to decline 160 bp year-on-year and EBITDA margin to fall 160 bps year-on-year.

Margins in the FMCG business are expected to decrease due to the PLI benefit in the base quarter. Outlook on the agri and paper and packaging businesses is a key monitorable.

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