ITC Ltd, the cigarette-to-soap maker, is expected to report a high-single-digit revenue growth for the third quarter of this fiscal year. This growth is anticipated to be driven by a strong performance in its cigarette, hotels, and agri segments. However, margin pressure is likely to persist due to inflation in input costs, leading to a potential decrease in net profit year-over-year, according to various brokerage firms.
Nuvama Institutional Equities, a domestic brokerage firm, predicts an 8% year-on-year revenue growth for ITC in Q3FY25. They anticipate a 3.5% year-on-year growth in cigarette volumes with a slight margin compression due to raw material inflation. The firm also expects growth in sales in the Hotels segment by 16% year-on-year and in the Agri segment by 20% year-on-year, driven by strong performance in both sectors.
Mirae Asset Sharekhan expects ITC’s sales to grow by 7.7% year-on-year in the third quarter, while adjusted profit after tax is projected to decrease by 10.8% year-on-year. PL Capital also foresees margin pressure due to input cost inflation, leading to slow growth and margin decline in the FMCG sector.
It is worth noting that ITC Ltd recently demerged its Hotels business, with the effective date set for January 1, 2025. Shareholders of ITC Ltd received shares of ITC Hotels at a share entitlement ratio of 10:1. Following the demerger, shares of the hospitality company were listed on the stock exchanges last month.
On the stock market, ITC Ltd’s stock opened at Rs 450.10 apiece on BSE and closed at 448.25 on the preceding day. Overall, while revenue growth is expected to be positive for ITC in Q3FY25, margin pressure and inflation in input costs may impact profitability for the company in the short term.
