Diversified conglomerate ITC Ltd reported a near 29 per cent rise in net profit to ₹3,013 crore for the first quarter ended June 30. Net profit in the year-ago-period stood at ₹2,343 crore.

Revenue from operations in Q1FY22 increased 36 per cent YoY to ₹12,959 crore while EBITDA grew by over 50 per cent. Cigarettes and other FMCG offerings together account for bulk of the gross revenues followed by agri-businesses.

“Lower other income due to lower market yields and treasury corpus limited flow through PAT (profit after tax),” the company’s statement said.

Sequentially, both revenues and PAT declined with verticals like the FMCG and agri-businesses being the exceptions.

“The second wave caused disruptions in convenience store operations during the quarter,” the company said. However, it was witnessing “faster recovery as compared to first wave” of infections with week-on-week improvements since mid-June with most markets returning to normalcy. Some in Kerala, Odisha and North East remain partially impacted.

According to Abneesh Ray, VP, Edelweiss Securities, ITC’s Q1FY22 saw a cigarette volume growth of 32 per cent, on a low base of 40 percent dip. Cigarette margins improved by 210 bps YoY due to higher operating leverage and revenues grew 33 per cent YoY.

Recoveries had led to cigarette volumes reaching nearly pre-Covid levels in Q4 FY21.

ITC said the volume recovery momentum witnessed in H2FY21 was impacted by localised lockdowns and restricted hours of convenience store operations in the wake due to the second wave of infections. Although product accessibility was sustained, certain markets in the South, metro cities and towns were “relatively more impacted”.

FMCG–others

The FMCG-Others segment saw a YoY revenue growth of over 10 per cent driven mainly by hygiene products, fragrances, spices, snacks, dairy and agarbattis. Hygene offerings saw “strong sequential growth, after normalising in H2 FY21 at elevated levels,” the company said.

Discretionary or ‘’out-of-home’ products performed strongly on a favourable base while staples and convenience foods saw “moderation in growth YoY on a high base effect”. Education and stationery products business remains impacted.

“After severe disruptions during the quarter, business is rebounding with the easing of restrictions led by leisure destinations, staycations and weekend getaways,” the company added.

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