ITC's strong performance in the second quarter of FY25 has led Anand Rathi to recommend a buy rating for the stock with a target price of ₹560.

Consolidated Revenue

The company's consolidated revenue increased by 15.6% year-on-year and 11.2% quarter-on-quarter, reaching ₹222,819 million. This growth was driven by strong performances in the Hotels, Value Added Agri products, and Leaf Tobacco sectors.

EBITDA Margin

However, the EBITDA margin declined, falling by 315 basis points year-on-year and 335 basis points quarter-on-quarter to 30.4%.

Profit Before Tax (PBT)

The profit before tax (PBT) grew by 2.7% year-on-year but decreased by 1.3% quarter-on-quarter to ₹68,480 million.

Net Profit After Tax (PAT)

The net profit after tax (PAT) increased by 1.8% year-on-year but decreased by 2.4% quarter-on-quarter to ₹50,545 million.

Cigarette Segment

The cigarette segment reported a 7.3% year-on-year growth, attributed to an improved product mix, cost management, and pricing actions.

FMCG Sector

The FMCG sector saw sales grow by 5.4% year-on-year, driven by strong demand in staples, snacks, dairy, personal care, fragrances, homecare, and agarbattis.

Hospitality Sector

In the hospitality sector, ITC's hotel revenue increased by 12% year-on-year to ₹7,277 million, supported by growth in food and beverage, retail, and wedding segments.

Agri-Business Segment

The agri-business segment experienced remarkable growth, soaring by 47% year-on-year to ₹57,805 million, driven by leaf tobacco exports and value-added agri products.

Future Growth

Looking ahead, ITC's branded packaged food business and personal care portfolio are expected to contribute to future growth. The company's strong balance sheet and the recent demerger of the hotel business are expected to support profitability and return ratios. Anand Rathi's optimistic outlook on ITC is based on the company's strategic initiatives and ability to adapt to market dynamics. The focus on enhancing product offerings and expanding market reach in the FMCG and agri-business segments is likely to contribute to sustained growth.

Conclusion

ITC's recent financial performance reflects a resilient business model with diverse revenue streams, positioning it well for future growth in the Indian market.