ITC revenue rises 28 per cent in Q1, but profit slips on tobacco tax hit

Kolkata: ITC found itself navigating a taxing quarter as higher levies on cigarettes and geopolitical disruptions weighed on profitability. Even so, the diversified conglomerate delivered robust revenue growth, powered by strong momentum across its FMCG portfolio.

For the quarter ended June 30, ITC reported standalone gross revenue of Rs 26,794.47 crore, up 28 per cent year on year, while revenue from operations stood at Rs 26,943.23 crore. Net revenue, however, declined 14 per cent, or 6 per cent after excluding the impact of its agri business.

Profitability came under pressure during the quarter. Standalone EBITDA and profit after tax fell 28 per cent and 27 per cent respectively. On a consolidated basis, gross revenue also rose 28 per cent, while EBITDA and profit after tax, before exceptional items, declined 24 per cent and 23 per cent respectively.

The company’s FMCG business emerged as the bright spot, with the non-cigarette portfolio posting 12 per cent revenue growth. Excluding staples, revenue increased 16 per cent, while profit before interest and tax climbed 21 per cent. EBITDA margins expanded by 55 basis points despite higher input costs driven by elevated prices of crude-linked packaging materials, edible oils, fuel and soap noodles.

Growth was led by dairy, snacks, instant noodles and frozen foods, each registering more than 20 per cent growth. Personal care products also recorded double-digit gains.

ITC expanded its packaged foods portfolio with launches including Bingo! Churros and Onion Rings, while YiPPee! strengthened its position as India’s second-largest noodles brand. The Prasuma and ITC Master Chef frozen foods range also continued to expand across more than 80 products.

In dairy, Aashirvaad Svasti recorded strong demand for milk, curd, lassi and paneer across eastern India. The beverages portfolio was refreshed with products such as B Natural Coconut Cola and Sunfeast smoothies.

While Aashirvaad Atta retained market leadership, growth remained subdued due to extreme heatwaves, LPG shortages and softer wheat prices. The company continued expanding its premium offerings and launched products including Aashirvaad Chana Sattu and Sunrise Sattu Masala.

Its personal care portfolio, comprising Fiama, Savlon, Nimyle and Engage, also delivered healthy growth, while Classmate notebooks benefited from a rebound in demand supported by premium product launches.

ITC’s digital-first brands, including Yogabar, 24 Mantra, Prasuma, Meatigo and Mother Sparsh, achieved an annual revenue run rate of around Rs 1,500 crore, underlining the company’s push into premium and online-focused consumer categories.

The cigarettes business faced one of its toughest operating environments following what ITC described as an unprecedented tax increase. While segment gross revenue jumped 81 per cent due to higher excise collections, net revenue and segment earnings fell 25 per cent and 35 per cent respectively as the company absorbed the tax impact and restructured pricing across its portfolio.

ITC said it introduced more than 30 pricing and portfolio interventions during the quarter to minimise consumer migration to illicit trade while protecting market share.

Its Paperboards, Paper and Packaging business continued its recovery, reporting 9 per cent revenue growth and a 38 per cent increase in segment profit, supported by better realisations, higher sales of value-added products and easing wood costs. The flexible packaging and carton businesses also posted robust growth.

The agri business faced disruptions from the West Asia conflict and an elevated base, with reported revenue of Rs 8,082 crore. Excluding timing differences in wheat procurement and trade disruptions, underlying revenue grew 9 per cent. Value-added agricultural products, including spices and processed fruits and vegetables, remained key growth drivers.

The company also strengthened sourcing efficiencies through its ITCMAARS digital platform, procuring 40 per cent of wheat requirements directly from farmers and securing 95 per cent of the wheat needed for the Aashirvaad Atta business during the procurement season.

Meanwhile, ITC’s fresh food business continued to scale rapidly under its ITC Next strategy. Gross merchandise value surged 90 per cent year on year, with the annual revenue run rate crossing Rs 300 crore across 75 cloud kitchens operating in five cities.

The company also retained its sustainability credentials, remaining water positive for 24 consecutive years, carbon positive for 21 years and solid waste recycling positive for 19 years. It also maintained its MSCI ESG ‘AA’ rating for the eighth consecutive year while strengthening its standing in global sustainability indices.

Despite a challenging operating environment and pressure on margins, ITC’s broad-based consumer portfolio and diversified business mix helped cushion the impact of higher taxes and global uncertainty, keeping the conglomerate’s long-term growth story firmly on track.