BENGALURU - Indian conglomerate ITC Ltd reported a bigger-than-expected rise in quarterly profit on Friday, helped by strong cigarette sales, while demand for its packaged foods held steady.

The cigarettes-to-hotels conglomerate said its profit rose to 50.31 billion rupees ($614.52 million) in the October-December quarter, from 41.56 billion rupees a year earlier.

Analysts on average expected profit to rise to 47.44 billion rupees, according to Refinitiv IBES.

"Consumer sentiments improved during the quarter," ITC, home to a spate of brands including Sunfeast and Classmate, said in a statement.

"Economic activity in India continued to gather momentum with sequential moderation in commodity inflation."

ITC's overall revenue from operations rose about 3% to 172.65 billion rupees, of which more than 40% came from its cigarette business.

Revenue in that business, which houses the Classic and Gold Flake brands, jumped nearly 17% to 72.88 billion rupees.

The business faces a challenge after India, this week, raised the National Calamity Contingent Duty on cigarettes by 16%, which some analysts said could mean a 'modest' 1.5% increase in tax. Others expect ITC to counter with price hikes.

ITC's fast-moving consumer goods business, which includes its biscuits, noodles, snacks and dairy portfolio, reported an 18% rise in revenue. It plans to buy Yoga Bar-maker Sproutlife Foods to expand in the nutrition-led healthy food business.

Revenue from the hotels business rose 50.5% in the quarter as leisure and business travel picked up with pandemic restrictions removed.

However, ITC's overall revenue growth was pulled down by a 37% drop in its agribusiness due to government restrictions on wheat and rice exports. The business accounted for a quarter of total revenue last fiscal. ($1 = 81.8690 Indian rupees)

(Reporting by Anisha Ajith in Bengaluru and Praveen Paramasivam in Chennai)