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ITC Limited, a diversified conglomerate, announced its March quarter results (Q4FY25) on Thursday, May 22nd, showcasing a consolidated net profit of ₹19,807 crore. This impressive figure was significantly influenced by an exceptional gain of ₹15,145 crore, stemming from the demerger of its Hotels Business into ITC Hotels Limited. This gain was accounted for under discontinued operations within the consolidated financial statements, presenting a somewhat distorted picture of the company's core operational performance. When adjusted to exclude this exceptional gain, the net profit reveals a different story, standing at ₹4,662 crore, which is actually lower than the ₹5,190 crore reported in the same quarter of the previous financial year. This comparison highlights the importance of analyzing financial results with and without extraordinary items to gain a comprehensive understanding of the underlying business performance. The revenue from operations during the reporting quarter reached ₹20,376 crore, surpassing Street estimates and demonstrating a notable 10% increase compared to the ₹18,561 crore reported in the March 2024 quarter. This positive revenue growth suggests that ITC's core businesses are generally performing well, despite the fluctuations in net profit caused by the demerger. The company's performance is particularly noteworthy in the context of the broader economic environment and the challenges faced by the consumer goods sector. ITC's ability to grow revenue by 10% indicates a strong market position and effective strategies in place to navigate competitive pressures. The Q4 results also shed light on the company’s profitability. On the operating front, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) came in at ₹6,836 crore, marking a year-on-year growth of 3.7% compared to ₹6,590 crore in the same quarter last year. While the EBITDA growth is positive, the EBITDA margin experienced a decline, falling to 33.5% in Q4 FY25 from 35.8% in Q4 FY24. This decline in margin suggests that while revenue and EBITDA are growing, the cost of goods sold or operating expenses are increasing at a faster rate, potentially due to factors such as rising raw material costs, increased marketing spend, or changes in the product mix. Further analysis of the cost structure would be necessary to pinpoint the exact drivers of this margin contraction. The performance of ITC's core FMCG (Fast-Moving Consumer Goods) segment, which encompasses cigarettes and other FMCG products, is a critical indicator of the company's overall health. This segment contributed ₹14,732 crore during the quarter, representing an increase from ₹13,996 crore a year ago. This growth demonstrates the continued strength of ITC's FMCG portfolio and its ability to cater to consumer demand. Within the FMCG segment, revenue from cigarettes rose to ₹9,228.66 crore compared to ₹8,688.92 crore in Q4 FY24, while the FMCG-Others segment increased to ₹5,503.33 crore from ₹5,307.94 crore. The relatively stronger growth in cigarette revenue compared to other FMCG products highlights the continued importance of cigarettes to ITC's overall revenue stream, despite increasing health awareness and regulatory pressures. This reliance on cigarettes could pose a risk to ITC in the long term, as consumer preferences and regulatory environments may continue to evolve. The company’s agri business segment also demonstrated a healthy rise, posting revenue of ₹3,694.64 crore, significantly higher than ₹3,136.43 crore in the same quarter last year. This impressive growth in the agri business segment suggests that ITC is successfully leveraging its capabilities in agriculture and rural markets. This could be attributed to factors such as increased demand for agricultural products, improved supply chain management, or successful diversification into new agri-related businesses. Revenue from paperboards, paper, and packaging stood at ₹2,188.69 crore, slightly higher than ₹2,072.86 crore in Q4 FY24, as per the company's earnings' report. This modest growth in the paper business indicates a stable performance in this segment. Overall, the ITC Q4 results present a mixed picture of strong revenue growth offset by declining margins and the impact of the hotels demerger on net profit. The dividend announcement is a positive sign for shareholders, but the company needs to address the challenges related to declining margins and dependence on cigarette revenue to ensure sustainable growth in the long term.
The announcement of a dividend of ₹7.85 per equity share further underscores ITC's commitment to rewarding its shareholders. This dividend, released alongside the March quarter numbers, is subject to the approval of the members at the ensuing 114th Annual General Meeting ('AGM') scheduled for Friday, 25th July 2025. If declared, the final dividend is slated for payment between Monday, 28th July 2025, and Thursday, 31st July 2025, to those members entitled to receive it, adhering to the regulatory compliance and shareholder rights. The Board of Directors emphasized this commitment during their meeting on May 22nd, solidifying investor confidence in the company's financial health and future prospects. This dividend announcement acts as a tangible return on investment, fostering a stronger relationship between the company and its shareholders. Furthermore, when considered in conjunction with the interim dividend of ₹6.50 per ordinary share declared by the board on 6th February 2025, the total dividend for the financial year ended 31st March 2025 would amount to ₹14.35 per ordinary share of ₹1 each. This robust total dividend reflects ITC's solid financial performance and its dedication to distributing earnings to its shareholders. It also makes ITC stock more attractive to investors seeking stable returns in addition to potential capital appreciation. The company has fixed 28th May 2025 as the record date for determining the entitlement of members for payment of the final dividend. This record date is crucial for shareholders, as it determines who is eligible to receive the dividend payment. Investors who own ITC shares on this date will be entitled to receive the final dividend, regardless of whether they sell the shares after the record date but before the payment date. This detailed information regarding the dividend announcement demonstrates ITC's commitment to transparency and effective communication with its shareholders. It provides clarity on the timing, amount, and eligibility criteria for the dividend payment, allowing investors to make informed decisions about their investments. The consistent dividend payouts are a significant factor contributing to ITC's reputation as a reliable and shareholder-friendly company.
Analyzing the ITC's Q4 results necessitates a deeper dive into the strategic decisions and operational nuances that shaped its performance. The demerger of the Hotels Business into ITC Hotels Limited, while resulting in a substantial one-time gain, also signifies a strategic shift in ITC's portfolio. By separating the hotels business, ITC aims to unlock greater value for shareholders and allow both entities to pursue independent growth strategies. This demerger could lead to increased focus and specialization for both ITC and ITC Hotels, potentially resulting in improved operational efficiency and enhanced shareholder returns. However, the long-term impact of the demerger will depend on the successful execution of the independent strategies of both companies. ITC's core FMCG business remains a key driver of revenue and profitability. The company's ability to maintain growth in this segment, despite intense competition from domestic and international players, is a testament to its strong brand recognition, extensive distribution network, and innovative product development. ITC's focus on premiumization, innovation, and expanding its product portfolio is likely to continue driving growth in the FMCG segment. However, the company also faces challenges such as rising input costs, increasing competition, and evolving consumer preferences. The performance of the agri business segment is also crucial for ITC, as it contributes significantly to the company's revenue and profitability. ITC's agri business is focused on sourcing agricultural commodities directly from farmers, processing them, and supplying them to various industries. The company's efforts to improve agricultural productivity, reduce wastage, and enhance supply chain efficiency are likely to contribute to continued growth in this segment. However, the agri business is also subject to risks such as adverse weather conditions, fluctuations in commodity prices, and government regulations. The paperboards, paper, and packaging segment is another important contributor to ITC's revenue. The company's focus on sustainable packaging solutions and expanding its product portfolio is likely to drive growth in this segment. However, the paper business is also subject to competition from other packaging materials and fluctuations in raw material prices. Overall, ITC's Q4 results reflect a complex interplay of strategic decisions, operational performance, and external factors. The company's strong revenue growth is a positive sign, but declining margins and the impact of the hotels demerger on net profit warrant careful attention. ITC's ability to navigate these challenges and capitalize on its strengths will determine its long-term success. The dividend payout, while a welcome reward for shareholders, is just one aspect of the overall investment proposition. Investors should consider ITC's strategic outlook, competitive positioning, and long-term growth potential when making investment decisions.
Source: ITC Q4 Results: Net Profit at ₹19,807 crore boosted by exceptional gain; dividend of ₹7.85 announced