ITC Q4 Results Review - Cigarette Volume Grows, FMCG Margin In Top Gear: ICICI Direct

ICICI Direct Report

ITC Ltd. witnessed revenue growth of 6.6% to Rs 17506.1 led by 14.2% growth in cigarette business and 19.4% growth in fast moving consumer goods business. Hotels business saw 100% growth with significant improvement in mobility in last one year.

The 14.2% growth in cigarettes business was led by ~12% volume growth and 2% realisation growth. ITC is gaining market share from illicit and contraband cigarettes. Moreover, stable taxation has resulted in category growing at faster pace.

We believe above Rs 10 price point category is witnessing strong traction and growing at 20-25%. Some of the new variants like ‘Classic Connect’, ‘Gold Flake Indie Mint’, ‘Wills Fab’ among others are getting strong traction.

Cigarette business also strengthened its presence in Duty-Free outlets at International as well as domestic airports. It also launched differentiated products in focus market.

The 19.4% growth in fmcg business was led by ~8% volume growth and ~11% realisation growth (pricing and mix). The company witnessed strong growth in atta (led by high pricing growth), biscuits, noodles, juices and snacks. Personal care category also saw decent growth except hygiene product portfolio (Savlon), which would be down by 40-50% from peak.

New launches and foray in newer categories under Aashirwad (Besan, Vermicelli), Sunfeast (Supermilk biscuits, Thin Arrowroot biscuit) and BNatural Smoothies (Tender Coconut Water, Strawberry and Chia seeds) among others supported the growth in fmcg business in Q4.

Education and stationary business continue to witness strong growth before the start of new academic year. Moreover, fully functional schools and collages also aided the growth in the segment.

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