ITC‘s share price was volatile on Tuesday morning as the company’s December quarter results seem to have disappointed investors.

What Happened: The FMCG giant reported a standalone net profit of ₹5,572 crore for the December quarter, marking an 11% growth from ₹5,031 crore in the same quarter of the previous financial year. The results surpassed street estimates of around ₹5,200 crore.

Total revenue from operations of the company rose by 2% on a year-on-year basis, reaching ₹17,651.85 crore from ₹17,265 crore. The revenue, however, missed analysts estimates of around ₹17,500 crore.

EBITDA for the quarter stood at ₹6,024 crore, marking a slight decline of 3.2% YoY. The EBITDA margin was reported at 36.6%, witnessing a 180 basis points YoY fall.

Revenue from the cigarette business exhibited a 3.5% increase from a year ago, reaching ₹7,548.75 crore. Cigarette volumes experienced a 2% dip y-o-y. ITC attributed the cigarette segment’s consolidation to a high base quarter following sustained growth momentum. Despite facing challenges such as escalating costs of leaf tobacco and other inputs, along with tax hikes, the company said that it managed to mitigate these through improved mix, strategic cost management, and calibrated pricing.

The conglomerate announced an interim dividend of ₹6.25 per share, the record date is set for February 8.

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Analyst Reactions: Brokerage had a mixed reaction to the company’s results. Jefferies maintained its “buy” rating for the stock with a price target of ₹520. The research firm said that the consolidation in cigarette volumes was expected by the tobacco-to-hotels giants. The analysts also added that the FMCG segment continued to see margin expansion.

Investec also maintained its “buy” rating for the stock with a price target of ₹499. The brokerage said that quarterly numbers were weak, but it expects strong revenue growth from Q1FY25.

HSBC maintained its “hold” rating for the stock with a price target of ₹480. The brokerage said that the company missed its estimates on most fronts. The analysts said that modest growth and tax hike overhang for the cigarette segment limit upside in the stock.

Dolat Capital downgraded the stock’s rating from “accumulate” to “reduce” revising the target price to ₹464 from ₹474. The brokerage said that while the company revenue and adjusted net profit were in line with its estimates, cigarette volumes missed expectations. The domestic brokerage said that Illicit cigarette sales were the biggest hurdle for the ITC's cigarette business growth.

Price Action: ITC’s share price was down 1.55% to trade at ₹442.85 as the markets opened on Tuesday.

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