ITC Q4: Tobacco Global, FMCG Local
ITC’s Q4FY25: cigarettes still print cash, agri delivers surprise growth, paper bleeds, hotels exit rich, and FMCG? Scaling brands, not revenue. Classic ITC — profitable, chaotic, and confused.
🧾 Financials at a Glance
Revenue: ₹17,248 Cr (+9.6% YoY)
PAT: ₹4,875 Cr (+0.8% YoY)
Gross Margin: 54.7% (↓347 bps)
Operating Margin (OPM): 34.7% (↓242 bps)
EPS: ₹3.9
Final Dividend: ₹7.85/share
Valuation: 22x FY27E — still half of HUL, despite similar dreams
🚬 Segment 1: Cigarettes — Old Habit, Strong Margins
Revenue up 6%, volume up ~5%
PBIT margin still 71.5%, down just 138 bps
Government didn’t raise taxes = party continues
Premium offerings doing well
Still funds 85%+ of total PBIT — ITC may diversify, but tobacco still writes the cheques
🛒 Segment 2: FMCG — Still Building, Still Bleeding
Revenue up 4%, margin fell 273 bps to 6.3%
Despite buying everything from organic food (24 Mantra) to baby care (Mother Sparsh) and frozen meat (Meatigo), topline refuses to budge
Distribution reach now 1.4x pre-COVID, modern + digital trade = 31% of sales
But demand? Still mostly missing
Margin drag from edible oil, wheat, packaging inflation
🌾 Segment 3: Agri — Quietly Becoming Strategic
Revenue up 18%, PBIT up 26%, margin rose to 7%
Strong growth in exports: leaf tobacco, spices, coffee
Nicotine derivative exports began in Q4 — think pharma-grade inputs, not bidi-grade fluff
ITC’s smartest hedge: globalise tobacco without calling it tobacco
📦 Segment 4: Paper & Packaging — Margins Pulped
Revenue up 5.5%, but PBIT margin fell 491 bps
Hit by wood price inflation and cheap Chinese/Indonesian imports
Specialty paper saw growth, but not enough to save the segment
Still valuable for backward integration with FMCG — just not a standalone star
🏨 Hotels: Demerged and Out
Hotel biz demerged into ITC Hotels Ltd
One-time PAT gain of ₹15,163 Cr
Now marked as “discontinued ops”
Cleaner RoCE, ROE ahead — asset-light dreams finally visible on the balance sheet
📈 Margins: Death by Inflation
Gross Margin: Down 347 bps — edible oil, paper, wheat, cocoa
OPM: Down 242 bps — FMCG losses + paper drag + inflation
Margins fell in every segment except agri
Cost controls, premiumisation, and scale yet to kick in meaningfully
💸 M&A: Shopping Spree, But Returns TBD
Bought 3 businesses in FY25:
24 Mantra Organic (health food)
Mother Sparsh (baby care)
Prasuma + Meatigo (frozen food & meat)
Pulp and paper biz from Aditya Birla also acquired
All strategic. None margin accretive… yet
Integration + monetisation still 2–3 years out
🧮 Valuation & Outlook
At 22x FY27 EPS, ITC still trades at a discount to FMCG peers (HUL at 47x)
ROCE expected to rise from 30.4% to 37.4% over 2 years — helped by hotel demerger + agri scale
Management betting big on FMCG + agri + premiumisation.
Market still watching — but not buying the FMCG dream… yet
🧠 Competitive Landscape
HUL: Leaner, faster, margin richer. But expensive at 47x.
Nestlé: Premium pricing king. But food-only.
Dabur / Marico / Godrej: More focused portfolios, but lack ITC’s scale and war chest
Advantage ITC? Distribution reach (2 Mn+ outlets), vertical integration, balance sheet firepower.
Disadvantage? Still not able to convert that into double-digit FMCG growth or margins
🗺️ Geographic & Export Play
Strong export growth in agri (leaf tobacco, spices, rice)
Nicotine derivatives have opened a new B2B global revenue stream
Domestic rural demand recovering slowly — expected to help FMCG in H2FY26
No major global expansion plans — ITC plays India + Exports, not global consumer markets
🧾 Bottomline
ITC Q4 shows a company trying to pivot while standing still.
The stock is cheap. The agri story is underappreciated.
FMCG still hasn’t arrived. But the cash keeps flowing.
Sometimes boring makes money. Sometimes boring just smokes it.