ITC Ltd is scheduled to release its earnings for the December quarter later today, and Dalal Street investors’ eyes will be on the performance of the mainstay cigarette business and the fast moving consumer goods vertical.

Steady volume growth in both cigarettes and non-cigarette FMCG business, coupled with strong traction in the hotels segment is likely to aid the quarterly performance of the diversified conglomerate.

However, the agri and paper and paperboards businesses are likely to have been sluggish and a fall in the revenue in these two segments may restrain the overall growth in the revenue of the company.

Here are the major monitorables in the flour-to-hotels major’s third quarter numbers:

Core Earnings

ITC is seen reporting a nearly 5% year-on-year (YoY) growth in revenue for the December quarter to Rs 17,016 crore, according to the average of estimates given by eight brokerages.Earnings before interest, taxes, depreciation and amortization or EBITDA is likely to increase 2.5% YoY to Rs 6,378 crore, and the profit may grow 2% to Rs 5,137 crore, the estimates showed.

Cigarette Ops

Axis Securities expects the cigarette business to report an 8% revenue growth, led by a 3% growth in volumes.In the same quarter last year, ITC’s cigarette volumes were abnormally high (up 5% QoQ) possibly due to a push in trade channels in the run-up to the Union Budget. This time however, the full-fledged Union Budget would be presented post elections in July. Hence, there may not be any abnormal trade build-up, said analysts.

FMCG Others

Analysts expect the non-cigarette FMCG business to report a 7-12% YoY growth in revenue, led by higher prices. Volume growth is expected to be in low single digits given slowdown in the rural markets.

“In the FMCG segment, we estimate 7.5% YoY revenue growth (versus 8.3%/16.1% in 2Q/1Q), as price hikes anniversarized since Q2 and 70/180 bps QoQ/YoY expansion in EBIT margin to 9%,” Kotak Institutional Equities said.

Hotels Show

Strong growth in occupancies and rise in average room rentals amid extended festival and marriage season is likely to drive robust growth in the hotels business of ITC.

Nuvama Institutional Equities expects a 15% YoY growth in revenue in this segment.

Any further updates on the demerger of the hotels business will also be eyed by investors.

Agri/Paper Ops

The two verticals that are likely to put up a weak show are the agri and paper and paperboards businesses.

Nuvama expects the agri business to report an 8% drop in revenue YoY and a fall in the operating profit too.

The paperboards business revenue is expected to decline 5-8% YoY amid weak demand and correction in prices.

Monitorables

Besides the Q3 performance, analysts and investors will closely track management outlook on volume and price trajectory in the cigarette and FMCG other businesses. The management’s view on the raw material price trend and outlook for both agri and paperboards businesses will also be eyed.

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