Introduction: A Legacy of Resilience Meets Modern Growth
ITC Limited, India’s iconic conglomerate, has once again demonstrated its ability to thrive amid macroeconomic headwinds. The company’s FY25 financial results, approved by the Board on May 22, 2025, reveal a story of strategic agility, sustained profitability, and shareholder-friendly policies. With a 114-year legacy, ITC has evolved from a tobacco giant into a diversified powerhouse spanning FMCG, hospitality, agriculture, and paperboards. For investors seeking stability, growth, and ESG leadership, ITC’s latest results offer compelling reasons to keep this stock on their radar.
Key Financial Highlights: Stability Amidst Challenges
1. Dividend Payout: A Testament to Consistent Returns
- Final Dividend: ₹7.85 per share, bringing the total FY25 dividend to ₹14.35 per share (up 4.4% YoY).
- Dividend Yield: ~3.5% (based on current market price), making it a top pick for income-focused investors.
- Cash Outflow: ₹17,956.69 crores (including interim dividend), underscoring ITC’s commitment to rewarding shareholders.
2. Standalone Financial Performance
| Metric | FY25 (₹ Cr) | FY24 (₹ Cr) | Growth (%) |
|---|---|---|---|
| Gross Revenue | 73,465 | 66,657 | +10.2% |
| EBITDA (Continuing Ops) | 24,025 | 23,494 | +2.3% |
| Net Profit (Continuing) | 20,092 | 19,910 | +0.9% |
| Net Profit (Incl. Discontinued) | 35,196 | 20,422 | +72.3% |
*The surge in net profit includes a one-time exceptional gain of ₹15,163 crores from the Hotels business demerger.*
3. Consolidated Performance
- Revenue: ₹80,942 crores (+10.3% YoY).
- Net Profit: ₹35,052 crores (+69% YoY), driven by the Hotels demerger.
Segment-Wise Breakdown: Strengths and Challenges
1. FMCG – Cigarettes: Steady as She Goes
- Revenue Growth: +7.1% YoY (FY25), driven by premiumization and volume recovery.
- Margin Pressure: Leaf tobacco costs rose sharply, but mix enrichment and cost controls limited EBITDA decline to 4.9%.
- Illicit Trade Fight: The GST Council’s “Track and Trace” mechanism could curb ₹35,000+ crore illegal market, benefiting ITC.
2. FMCG – Others: Battling Inflation, Winning Market Share
- Revenue: ₹21,982 crores (+5% YoY), ex-Notebooks growth at 6.2%.
- Hotspots:
- Aashirvaad Atta: 14% revenue from value-added variants (multigrain, organic).
- Bingo! Snacks: Launched low-fat popped chips and Korean flavors to capture Gen-Z.
- Personal Care: Fiama and Vivel grew 18% in premium segments.
- Margin Drag: Edible oil, wheat, and cocoa costs spiked 12-15%, but pricing actions and digital efficiencies (eB2B platform UNNATI) mitigated impacts.
3. Agri Business: The Dark Horse
- Revenue Surge: +25% YoY to ₹19,754 crores, led by leaf tobacco exports and rice.
- Nicotine Derivatives: Exports commenced from ITC IndiVision’s ₹500+ crore facility. Expected to scale in FY26, tapping the $2.5 billion global nicotine market.
4. Paperboards & Packaging: Weathering the Storm
- Revenue Growth: +1% YoY to ₹8,423 crores, but EBITDA fell 34% due to cheap Chinese imports and wood price hikes.
- Strategic Moves: Anti-dumping petitions filed; ₹1,200 crore investment in décor paper capacity to boost margins.
Strategic Masterstroke: Demerger of Hotels Business
The demerger of ITC Hotels (effective January 1, 2025) is a game-changer:
- Shareholder Value: Shareholders received 1 ITC Hotels share for every 10 ITC shares held.
- Exceptional Gain: ₹15,163 crores recognized, boosting FY25 net profit.
- Focus: ITC retains 39.88% stake in ITC Hotels, now an associate, while sharpening focus on core FMCG and agri-businesses.
FY25 Discontinued Ops Snapshot:
- Revenue (9M): ₹2,277 crores.
- Profit: ₹15,104 crores (incl. exceptional gain).
Sustainability & ESG: A Global Benchmark
ITC’s “Responsible Competitiveness” ethos continues to shine:
- Triple Positivity: Water positive (23 years), carbon positive (20 years), solid waste recycling positive (18 years).
- Awards: ‘AA’ MSCI ESG rating (7th straight year), Dow Jones Sustainability Emerging Markets Index (5th year).
- Initiatives:
- Climate Smart Agriculture: 31.7 lakh acres covered.
- Plastic Neutrality: 76,000 MT waste recycled.
- Renewable Energy: 52% of power from green sources.
Why It Matters: ESG compliance reduces regulatory risks and attracts global investors managing $30+ trillion in ESG assets.
Liquidity and Balance Sheet Strength
- Cash Reserves: ₹2,962 crores (bank balances) + ₹15,285 crores (investments).
- Debt: Near-zero standalone debt; consolidated debt-to-equity at 0.08x.
- ROE: 25.8% (FY25), outperforming FMCG peers like HUL (18.2%) and Nestlé (22.1%).
Risks and Challenges
- Input Cost Volatility: Edible oil, wheat, and pulpwood prices remain elevated.
- Regulatory Pressures: GST hikes on cigarettes or stricter ESG norms could impact margins.
- Competition: Regional FMCG players and illicit trade erode market share.
Future Growth Drivers
- FMCG Acquisitions:
- 24 Mantra Organic (Sresta), Mother Sparsh (baby care), and Prasuma/Meatigo (Ample Foods) to tap into health-conscious millennials.
- Century Pulp Acquisition: Adds scale in paperboards, synergies with existing operations.
- Digital Push: eB2B platform UNNATI now covers 8 lakh outlets, driving rural penetration.
- Export Momentum: Nicotine derivatives, spices, and coffee poised for global growth.
Valuation and Market Position
- Price-to-Earnings (PE): 24x (FY25), below 5-year average of 28x.
- Market Cap: ₹5.2 lakh crores (as of May 2025), India’s 15th most valuable company.
- Dividend Aristocrat: 25+ years of uninterrupted dividends, a rarity in volatile markets.
Why Investors Should Watch ITC
- Defensive Growth: Non-cyclical FMCG portfolio ensures steady cash flows.
- Dividend Consistency: Top-tier yield in a low-interest-rate environment.
- ESG Leadership: Aligns with global investment trends.
- Demerger Upside: Unlocking value in hotels and potential rerating of core business.
- Rural Recovery Play: Agri-business and affordable FMCG segments to benefit from monsoon-driven demand.
Conclusion: A Multifaceted Gem in the Indian Market
ITC’s FY25 performance is a microcosm of its resilience—balancing short-term challenges with long-term vision. While the Hotels demerger provided a one-time boost, the core business continues to deliver steady growth. For investors, ITC offers a rare mix of safety (dividends), growth (FMCG/agri expansions), and sustainability (ESG leadership). As the company pivots towards a “ITC Next” strategy focused on digitalization and premiumization, this stock remains a cornerstone of any India-focused portfolio.
Keep ITC on your watchlist—it’s not just a company; it’s a compounding machine built for decades.
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