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ITC Q2 preview: Analysts see 13% YoY revenue jump; high costs may hit PAT

Topics ITC | FMCG companies | FMCG stocks

A swift recovery in cigarette volumes and other discretionary business may aid September quarter earnings of FMCG major ITC. This, along with a sharp rebound in the hospitality segment on the back of normalization of out-of-home activities and vacation season, may further support profitability, said analysts.

The company is slated to report its Q2FY22 results on Wednesday, October 27, and may report up to 13 per cent year-on-year growth in standalone sales while Ebitda (earnings before interest, tax, depreciation, and amortization) may expand up to 117 basis points YoY.

On the bourses, the stock of the cigarette-to-hotels conglomerate rallied 16 per cent on the BSE during the quarter under review, as against around 13 per cent gain in the benchmark S&P BSE Sensex, ACE Equity data shows.

Here’s what leading brokerages expect:

Prabhudas Lilladher

The brokerage pegs ITC’s standalone sales at Rs 12,636.9 crore, up 13 per cent YoY from Rs 11,183.1 crore reported in the year-ago period (Q2FY21). Sequentially, this would be a 3.4-per cent growth over Rs 12,217.1-crore sales clocked in the previous quarter of the current fiscal (Q1FY22).

This growth, the brokerage says, will be driven by 8 per cent volume growth in the Cigarette segment on the back of sustained recovery. Besides, FMCG growth is pegged at 7 per cent while Hotel revenues could grow 3.2x led by high occupancy at holiday destinations. Ebitda and Ebitda margins are seen at Rs 4,802 crore and 38 per cent, respectively.

The net profit, however, may be impacted by lower other income, it says, and is seen at Rs 3,577.9 crore, up around 11 per cent YoY. It was Rs 3,232.4 crore last year and Rs 3,013.5 crore in Q1FY22.

Emkay Global

This brokerage has a slightly lower Ebitda and Ebitda margin expectation at Rs 4,630.1 crore and 36.9 per cent YoY with 11 per cent volume and 14 per cent EBIT growth in cigarettes; 10 per cent volume and 11 per cent Ebit growth in FMCG; and 13 per cent volume and 14 per cent Ebit growth in other segments. Ebitda was Rs 4,060.6 crore in Q2FY21 and Rs 3,992.2 crore in Q1FY22. Margin, on the other hand, were 36.3 per cent and 32.7 per cent, respectively.


Given higher input costs, the brokerage expects pressure on operating profit margin and net profit during the quarter under review. The former is projected at 33.4 per cent, down 46 per cent YoY, while the latter is seen at Rs 3,490 crore, up 8 per cent YoY.

ICICI Securities

On a consolidated basis, analysts at the brokerage expect revenue at Rs 13,585.9 crore, up 13.4 per cent YoY, while net profit is seen at Rs 3,619 crore, up 12 per cent YoY.

“Consolidated revenues are likely to grow at 13.4 per cent with the expected 9.4 per cent growth in cigarettes sales. We expect cigarettes volumes growth of 7 per cent; Hotels business sales is estimated to grow 2x from the low base quarter; and FMCG & paper business is likely to grow 13.4 per cent & 12.2 per cent,” it said

We estimate agri-business growth of 6.5 per cent on a relatively high base.  Further, operating profit margin is seen rising 118 bps at 35.1 per cent.

HDFC Securities

Recovery in Cigarette volume and mix impact on margin, FMCG business EBIT margin, recovery in Paper Business led by FMCG sector recovery, and outlook on Agri and Hotel businesses will be some of the key monitorables for the brokerage.

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