14 August 2023, Mumbai: India’s diversified conglomerate, ITC Ltd, has announced its first-quarter results that surpassed expectations, buoyed by stringent cost control measures and robust demand for consumer goods across urban and rural markets. The company reported a remarkable 17.6% increase in net profit, amounting to 49.03 billion rupees ($590.28 million), for the three-month period ending on June 30. This performance exceeded the 41.69 billion rupees recorded during the same period last year.
Performance in Average profit
Despite analysts’ average profit projection of 48.29 billion rupees based on Refinitiv IBES data, ITC managed to outperform expectations. However, revenue from operations declined by over 7%, totaling 169.95 billion rupees. The decrease in revenue was primarily attributed to a significant drop of 24% in the agricultural business due to export restrictions imposed on wheat and rice.
16% Increase in sales
In the fast-moving consumer goods (FMCG) sector, which includes popular brands such as Aashirvaad, Bingo, and Yippie, ITC witnessed a remarkable surge of more than 16% in sales. Simultaneously, the company effectively managed its expenses, achieving a notable 14.7% reduction. Furthermore, the hotels business, which has received approval from the ITC board to undergo demerger into a separate entity, experienced an impressive growth of over 8%. This growth was fueled by the recovery of domestic tourism and an increase in corporate bookings.
ITC Hotels
As part of the demerger process, ITC Hotels will soon operate as an independent entity. The plan entails listing ITC Hotels on the market within approximately 15 months. Shareholders of the parent company will receive one share of ITC Hotels for every ten shares they hold in the existing entity.
Notably, ITC’s peer, Dabur India (DABU.NS), also emphasized a positive resurgence in rural demand. This trend further underscores the resilience and potential of the consumer goods sector in the Indian market.