ITC: Q1FY15 Result Analysis

FMCG major  ITC  reported a 15.6% YoY growth in net profit at Rs 2,186.4 crore in first quarter of FY15. Although it was lesser than the street expectations, but strong revenue growth in cigarette, agri and paper businesses are visible in this quarter ended June 2014. Net sales grew 24.9%, to Rs 9,164.4 crore in the quarter ended June 2014 compared to Rs 7,339 crore in corresponding quarter of last fiscal.

Revenue from its cigarette business (under FMCG category), which contributes more than 45% to total revenue of the company, reported a 18.8% growth at Rs 4,201 crore on YoY basis. FMCG others (which included packaged foods, apparel, stationery products, personal care products and agarbattis) grew by 10.9% on YoY basis to stand at Rs 1,934.61 crore in the quarter gone by.

Agri business revenue during the quarter (which covers commodities such as soya, spices, coffee and leaf tobacco) reported a massive growth of 50.6%to stand at Rs 3,296.1 crore and revenue from paperboards, paper and packaging business grew by 11.7% at Rs 1,288 crore compared to the year-ago period. However, only hotels business posted a marginal decline in revenue at Rs 248.7 crore during the quarter compared to Rs 249.9 crore in corresponding quarter of last fiscal. 

EBITDA of the company increased by 17.5%, on YoY basis to come in at Rs 3,194 crore but margin dropped 230 basis points to 34.8 percent in first quarter of current financial year 2014-15 impacted by higher expenses. Total expenses of the company shot up 28.3% at Rs 6,202.02 crore during April-June quarter due to higher raw material cost and purchases of stock-in-trade while tax cost jumped by 24% to Rs 1,079.28 crore during the same period. Backed by better results the stock may trade with a positive bias in coming sessions.