ITC to release Q1 results on August 1: Volume growth, rural demand to remain in focus

ITC shares have risen around 6% since the presentation of Union Budget for 2024-25, which spared tobacco products and cigarettes from any new tax.

Investors will be keenly watching the FMCG major’s commentary on the performance of its cigarette vertical, which accounts for a significant part of its revenue. Market observers will also keep an eye on paper volume, hospitality sales, and FMCG product volumes.

Focus on volume growth and rural demand

Investors will focus on the volume growth of cigarette and FMCG verticals. Leading FMCG companies' June quarter business updates highlighted improvement in volume growth and a gradual recovery in rural demand. Earlier this month, Dabur India reported mid-single-digit volume growth in the quarter, while Hindustan Unilever posted a 4% rise in volume in the first quarter. Oral hygiene products major Colgate Palmolive has reported high single-digit volume growth.

The companies highlighted that demand trends were better quarterly, and rural growth also picked up for the second quarter in a row, outpacing urban growth.

Paperboards, Paper and Packaging remains a concern

ITC reported in the previous quarter that its paperboards, paper, and packaging segment was impacted by low-priced Chinese supplies in international markets, muted domestic demand, surge in wood cost, and high base effect. Investors will be keenly watching the segment's performance in the June quarter, as its segment revenue dropped marginally to ₹2,072.86 crore in the March quarter.

ITC posted weak profit numbers for March quarter

Profit and revenue growth numbers of the conglomerate will be watched as ITC reported a marginal 1% drop in its consolidated profit to ₹5,120 crore in the March quarter. Its revenue from operations was down at ₹19291.40 crore in the March quarter compared with ₹19,337.84 crore in the same period of the previous year.

Revenue from the cigarettes segment rose by 7% to ₹8,689 crore in the March quarter. The company said the cigarette business saw consolidation of volumes on a high base.

ITC shares hit a high of ₹497.9 on NSE on 31 July 2024. However, the stock pared its early gains to close at ₹495.5 apiece.