(Reuters) -Indian consumer goods major ITC reported stronger-than-expected second-quarter profit on Thursday, propelled by solid growth in its cigarettes and packed goods businesses.
ITC’s earnings were lifted by its cigarettes business, with steady demand and pricing underpinning growth. Its broader FMCG portfolio — from snacks and biscuits to personal care — benefited from wider distribution and a pickup in rural as well as urban demand.
The maker of Sunfeast biscuits and Gold Flake cigarettes reported a 5.4% rise in standalone profit to 51.80 billion rupees ($589.34 million) for the quarter ended September 30, beating analysts’ estimate of 50.71 billion rupees, according to LSEG data.
Rural demand remained resilient while urban consumption picked up, the company said, adding that tax reforms rolled out during the reported quarter should improve affordability and lift consumption further.
The Indian federal government announced cuts to its goods and services tax system in August, making everything from biscuits to small cars cheaper from September 22.
Peers Hindustan Unilever and Nestle India have also seen an improvement in urban demand, with shoppers loosening their purse strings as inflation cools and prices for some goods drop due to the tax cuts.
Tighter cost controls and calibrated pricing actions also supported margins, with core margin at 35.1%, up 185 basis points year-on-year.
Overall revenue rose 7.1%, with cigarette sales up 6.8%, to 87.22 billion rupees. The consumer goods arm, which houses brands such as Aashirvaad and Bingo, grew about 7% to 59.64 billion rupees.
Agribusiness, which contributes to roughly 20% of overall revenue, saw a 31% slump in the second quarter.
The slowdown comes as the United States reviews and raises tariffs on select farm commodities, making buyers wary of locking in big orders and forcing exporters like ITC to deal with delayed call-offs and slower dispatches.
($1 = 87.8950 Indian rupees)
(Reporting by Chandini Monnappa and Urvi Dugar in Bengaluru; Editing by Sonia Cheema)
