5 Takeaways from ITC Q2 Results

One of Nifty 50's top gainers in 2022, ITC, post market hours on Thursday, declared its quarterly results.

Only two other companies from the Nifty, Adani Enterprises and Coal India have given more returns than ITC in 2022.

The optimism for its share price hitting multi-year high comes after several reports suggested, the company is planning to explore alternate structures for their hotel business.

The share price of ITC saw a good run-up in the past few sessions ahead of its results.

And rightly so. The street was expecting a strong quarter for ITC due to the revival in its hotel, paper and agri-business.

In the June quarter gone by, ITC had reported a good performance with volume growth across cigarette segment and margin expansion in cigarettes, paperboard and hotels business.

Low base helped ITC in posting strong agri-exports & higher paperboard prices.

So, how did ITC fare this time? Here are five takeaways from ITC's Q2 results.

• ITC's net profit saw a strong growth of 20.8% to Rs 44.7 bn in the second quarter ended September 2022.
  
  The company has posted a profit of Rs 37 bn a year ago. Sequentially, profit rose 7.1% from Rs 41.7 bn recorded in June quarter this year.
• Revenue from operations surged 26.6% to Rs 171.6 bn.
  
  Both revenues and profit beat estimates.
  
  The company attributed the performance to accelerated digital adoption, customer centricity, execution excellence and agility.
• ITC's flagship cigarette business grew sales by 23.2% to Rs 69.5 bn in the said quarter, while the segment's profit before interest and taxes (PBIT) went up by 23.6% to Rs 44.3 bn.
  
  The company said stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, enabled continued volume recovery from illicit trade.
• Its FMCG business reported sales growth of 21% at Rs 48.8 bn. For this segment, staples, convenience foods, discretionary and out-of-home categories drove growth.
• Coming to the hotel and paper business, ITC's hotel segment almost doubled revenues to Rs 5.4 bn. The company said average room rates and occupancy were ahead of pre-pandemic levels in the quarter.
  
  Meanwhile, ITC improved sales by 25% for the paperboard, paper and packaging businesses.

How ITC has performed recently

Ahead of its results, shares of ITC gained 6% in the past four sessions.

On Thursday, the stock opened flat at Rs 346.5 on the BSE and went on to touch a high of Rs 350.9. It settled 1% higher.

ITC has a 52-week high quote of Rs 350.9 touched today and a 52-week low of Rs 207 touched on 24 February 2022.

In 2022 so far, shares of the company have gained 59%.

Here's a table showing comparative analysis of ITC with its peers:

Comparative Analysis

Company	ITC	HUL	VST Industries	Godfrey Philips	Godrej Consumer
ROE (%)	25.9	18.4	31.8	15.9	17.0
ROCE (%)	33.8	24.8	42.5	21.4	18.7
Latest EPS (Rs)	13.2	39.0	218.2	90.0	16.8
TTM PE (x)	26.3	66.2	16.0	15.3	49.3
TTM Price to book (x)	6.6	11.8	4.7	2.4	7.1
Dividend yield (%)	3.3	1.3	4.0	2.0	0.0
Industry PE (x)	58.2
Industry PB (x)	11.5

Data Source: Ace Equity, Equitymaster

ITC is one of the best dividends paying stocks. We did an editorial back in January 2022 listing the best dividend stocks you can count on.

We also covered a dividend comparison piece featuring ITC.

Co-head of Research at Equitymaster did an editorial on ITC back in September 2021 explaining why it's a great time to buy ITC.

For his latest view, you can check out the below video:

About ITC

ITC is India's biggest cigarettes & one of the largest fast-moving consumer goods (FMCG) company. It has 78% market share in cigarettes and presence in other business segments such as staples, biscuits, and personal care products.

The company is also present in paperboard, printing & packaging business.

The company completed 100 years in 2010 and it employs over 36,500 people at more than 60 locations across India and is part of the Forbes 2000 list.

To know more, check out ITC company fact sheet and quarterly results.

You can also compare ITC with its peers:

ITC vs VST Industries

ITC vs Godfrey Philips

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...