Although cigarette-to-soap maker ITC Ltd is expected to report a single digit year-on-year (y-o-y) revenue growth for the fourth quarter of last fiscal, gross margin and Ebitda margin are likely to fall sharply during the period, due to high raw material prices, according to brokerages.
The diversified conglomerate could witness a de-growth in its adjusted net profit on a y-o-y basis for Q4FY25.
The Hotels business of ITC Ltd was demerged into ITC Hotels Ltd with effect from January 1, 2025. The equity shares of the hospitality major were listed on the NSE and BSE on January 29.
According to Nuvama Institutional Equities, ITC Ltd’s adjusted net profit could decline 1 per cent y-o-y during January-March quarter last fiscal. It forecast overall revenue would grow 8.4 per cent y-o-y.
The domestic brokerage firm said during the quarter cigarette volumes is likely to increase 4 per cent y-o-y on a base of 2 per cent growth in the year-ago period. Non-cigarette FMCG is expected to witness weak sales and margins in Q4FY25. Agri sales are likely to surge 20 per cent y-o-y on a soft base of 13.4 per cent decrease in Q4FY24. However, due to inflationary pressure related to raw materials, the company’s Ebitda margin is likely to fall to around 34.8 per cent from 38.1 per cent in the fourth quarter of financial year 2023-24.
According to Axis Securities, the company’s revenue could grow by around 1 per cent y-o-y, whereas net profit could report a 7.5 per cent y-o-y fall during the fourth quarter. EBITDA margin may contract to around 35.1 per cent.
Kotak Institutional Equities said that for ITC a 4.5 per cent y-o-y volume growth in cigarette business could translate into a 7 per cent gross revenue growth for the segment. It expects cigarette EBIT to grow at 3.5 per cent y-o-y in Q4FY25, with a 195 basis points decline in EBIT margin during the period due to some inflation in leaf tobacco and other inputs.
The cigarettes business has been the largest revenue and profit contributor for the company, which is the country’s largest cigarette maker.
On Thursday, ITC Ltd scrip opened at ₹433.45 apiece against previous close of ₹432.95 on BSE. Shares were trading at ₹425.65 at 9:30 a.m., down 1.69 per cent.
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Published on May 22, 2025