ITC Q2 Review - Cigarette Volumes Still Subdued: Dolat Capital

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Dolat Capital Report

ITC Ltd.’s Q2 FY22 revenue and APAT was in line with our estimates, Ebitda was ahead of estimates.

Cigarette business posted revenue growth of 10.5% on a base of 2% decline, marginally better than our estimate, with volume growth of 10%. However, on a 2-year basis, volumes are still down ~5%. Ebit margin in the cigarette business remained flat YoY but increased sequentially. However, the margin is still down from pre-covid levels.

FMCG business witnessed 2.9% revenue increase in Q2 FY22. Though margins contracted by 40 bps YoY to 6.8%, it increased 210 bps QoQ – expansion post three consecutive quarters of sequential decline.

Paper and packaging business reported strong 25% growth driven by demand across most end-user segments. However, publications, QSR and wedding card remain relatively muted.

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