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ICICI Securities Report
ITC Ltd.'s cigarette business continues to report strong revenue growth (~11% three-year compound annual growth rate, volumes up ~15% in Q3 versus consensus at up 10%) driven by market share gain from informal segment due to stability in taxes and deterrent action by enforcement agencies.
We expect volume growth for formal industry to remain healthy in FY24E. We reckon, there's opportunity to drive (some) price-driven growth as adverse effects of price elasticity reduces during times of high consumer inflation like these.
Fast moving consumer goods revenues grew 18% YoY. Management highlighted that FMCG witnessed strong growth in both staples and convenience foods along with discretionary and out-of-home categories, and across channels and markets driven by ramp up in outlet coverage (both in urban and rural).
Revenue from hotel segment grew at healthy 50.5% YoY (9% three-year CAGR). Paperboards segment also had a good quarter with revenue growth of 13% YoY and a strong Ebit margin print of 26%.
Agri-business witnessed pressure with the impact of restrictions imposed on wheat and rice exports by the government during the year with revenue declining 37% to Rs 31.2 billion, however strong growth in high value added agri-products and leaf tobacco led to absolute Ebit growth of 33% YoY.
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