India's ITC posts profit beat as cigarette and snacks sales rise

BENGALURU (Reuters) - Cigarettes-to-hotel conglomerate ITC Ltd posted a 20.8% rise in second-quarter profit that beat estimates, driven by demand for its cigarettes and snacks.

The maker of Classic cigarettes, Sunfeast biscuits and Bingo chips reported a profit of 44.66 billion Indian rupees ($541.18 million) for the quarter ended Sept. 30, compared to a profit of 36.97 billion rupees a year earlier.

Analysts were expecting a profit of 43.68 billion rupees, according to Refinitiv IBES data.

ITC, which has a diversified presence in sectors like snacks, hotels, speciality papers and agri-business, owns many household names like Aashirvaad Atta and Classmate notebooks.

Revenue from operations rose 26.6% to 171.6 billion rupees, helped by growth in two of its mainstay segments – cigarettes and other FMCG, whose revenue rose 23.3% and 21%, respectively.

"Stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, enable continued volume recovery from illicit trade," the company said in a statement.

The company's hotel business saw a 81.8% revenue jump, signalling a strong comeback from the impact of COVID-related curbs on travelling.

The recent easing in raw material costs could further boost earnings of diversified consumer companies like ITC, which suffered from inflationary pressures and supply chain disruptions due to the Russia-Ukraine conflict and lingering impact of the pandemic.

"Inflationary headwinds continued to weigh on consumption expenditure, which was partly offset by early onset of festive season this year in some parts of the country," ITC said.

ITC has been among the top gainers on Nifty 50 Index so far this year, with its shares rising over 60% year to date.

($1 = 82.5240 Indian rupees)

(Reporting by Nishit Navin and Navamya Ganesh Acharya in Bengaluru; Editing by Shailesh Kuber)