ITC surges 4% on 3.7% Q2 profit rise; consolidates stake in Oberoi, Leela

Diversified FMCG major ITC Ltd recorded a 4.07% rise in share price in early morning trade on Friday after the company recorded a 3.7% year-on-year rise in July-September (Q2 FY25) profit and a 17% increase in revenue.

The scrip opened in green on the BSE and hit the day's high at ₹491 before settling 3.81% higher since the previous close at ₹489.55 at 9.41 AM. Currently, the scrip trades 11% lower than the one-year high of ₹528.55 hit on September 27, 2024, with its m-cap at ₹6.12 lakh crore.

ITC's Q2 FY25 profit grew 3.7% year-on-year to ₹5,078.3 crore from ₹4,927 crore year-ago (Q2 FY24). Revenue surged 17% to ₹19,327.8 crore from ₹16,550 crore a year ago.

Earnings per share for the said quarter stood at ₹4.06.

ITC says there was a challenging operating environment in Q2 FY25. "Subdued demand conditions, unusually heavy rains in parts of the country, high food inflation and sharp escalation in certain input costs (leaf, wood, etc.) witnessed during the quarter."

Among different segments it operates, ITC saw revenue growing 5.4% in FMCG-other segments, with staples, biscuits, snacks, frozen snacks, dairy, premium soaps, homecare and agarbatti driving growth. In cigarettes, the net segment revenue grew 7.3%, while segment PBIT was up 5.1%. The hotel segment delivered a strong performance. Its revenue grew 12.1% YoY, with F&B, retail and wedding segments driving growth.

ITC's agri business revenue grew 47% YoY, led by leaf tobacco and value added agri products, with the segment PBIT up 27.5%.

ITC said paperboards, paper and packaging was impacted in Q2 due to low priced Chinese supplies in global markets including India; soft domestic demand conditions; and "unprecedented" surge in wood prices.

Share acquisition in Oberoi, Leela

The company has consolidated its shareholding in rival hospitality chains Oberoi and Leela by acquiring shares from Russel Credit Ltd. The ITC board approved the acquisition of 1,52,32, 129 shares of ₹2 each of EIH Ltd and 34,60,829 shares of ₹21 each of HLV Ltd, from Russell Credit('RCL'), a wholly-owned subsidiary of the company. The move is aimed at consolidating the shareholding of EIH and HLV under the company. Post this, its total shareholding in these two will be 16.13% (10,08,53,602 shares) and 8.11% (5,34,13,884 shares) of their paid-up share capital, respectively. EIH runs key hospitality brands Oberoi and Trident while HLV operates the luxury hotel chain Leela.

The board also approved the acquisition from RCL of the entire share capital (comprising 4.2 crore shares of ₹10 each) of Greenacre Holdings Ltd, an unlisted company and a wholly owned subsidiary of RCL, at book value.