Consumption demand to remain strong in coming quarters
ITC posted better second quarter results on the back of strong showing of agri-business vertical during this period
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Bengaluru, 25 October: ITC posted better second quarter results on the back of strong showing of agri-business vertical during this period.
During the quarter, while agri business revenue soared 47 per cent YoY (year on year) growth, the hotels business grew 12.1 per cent YoY. The paperboards, paper & packaging segment continued to suffer, up only 2.1 per cent YoY.
“Cigarettes net revenue increased 7.3 per cent YoY driven by portfolio and market initiatives. Cigarettes volume growth of 3.3 per cent YoY is ahead of our expectations. FMCG – Others’ revenue grew 5.4 per cent YoY despite muted demand and a severe monsoon,” Nuvama Institutional Equities wrote in a note.
The brokerage firm noted that heavy monsoon and inflationary pressure have impacted the demand environment for the FMCG segment in the second quarter. However, the company management indicated that long-term growth story of Indian economy remained strong.
“Q2FY25 was characterised by subdued demand, localised heavy rainfall, high food inflation and increases in certain input costs. According to the company, despite global economic challenges, India's economy remains robust due to the government's strategic policy interventions and focus on infrastructure development,” the report said.
“India's status as one of the world's fastest-growing major economies is supported by its favourable demographic factors, rapid urbanisation and digital adoption. Factors such as a good crop harvest, anticipated inflation moderation, improved agricultural terms of trade, and government investment in public infrastructure and rural development are expected to boost consumption demand,” the report added.
ITC’s cigarettes segment posted healthy growth during the second quarter.
“Market standing of ITC continues to be reinforced through strategic portfolio and market interventions with focus on competitive belts and to counter illicit trade. Differentiated and premium offerings of the company continue to perform well. Severe cost escalation in leaf tobacco partially mitigated through improved mix, strategic cost management and calibrated pricing actions,” the report said.
