Cigarette packs at a local shop, arranged for a photograph in Mumbai, India. (Photographer: Anirudh Saligrama/BloombergQuint)

ITC’s Profit Rises For Eighth Straight Quarter

ITC Ltd.’s profit rose for the eighth straight quarter in the October-December period due to a one-time tax benefit.

The country’s largest cigarette maker's net profit rose 17 percent to Rs 3,090 crore as compared to the same quarter last year, the company said in a stock exchange filing. This was higher than the Bloomberg consensus estimate of Rs 2.830 crore. The bottom line was aided by a Rs 413 crore write-back of the Tamil Nadu entry tax after a favourable order by the Supreme Court.

  • Revenue rose 6 percent year-on-year to Rs 9,772 crore, less than the Bloomberg consensus estimate of Rs 10,608 crore.
  • Earnings before interest, tax, depreciation and amortisation rose 10.1 percent to Rs 3,905 crore.
  • Operating margin expanded to 40 percent from 38.3 percent last year.

The steady earnings performance came “despite a challenging operating environment marked by severe pressure on legal cigarette industry volumes and limited trading opportunities in the agri-business,” ITC said in a separate press release.

Cigarette volumes declined about 4-5 percent, analysts told BloombergQuint on the condition of anonymity.

“The concern is that the excise could be levied on cigarettes during the forthcoming budget,” Sameer Deshmukh, an analyst at Reliance Securities told BloombergQuint, adding that the GST and the excise duty on cigarettes are the key things to watch out for in the upcoming Union Budget.

The FMCG industry saw some recovery during the quarter from the transitional impact of GST rollout but the overall demand conditions remained subdued, ITC said in its release.

Here are the highlights of ITC’s segmental performance.

Cigarette Business

  • Sales: Rs 4,629.2 crore versus Rs 8,287.9 crore.
  • EBIT: Rs 3,269 crore versus Rs 3,033 crore.

FMCG – (Excluding Cigarettes)

  • Sales: Rs 2,871.8 crore versus Rs 2,569.3 crore.
  • EBIT: Rs 47 crore versus a loss of Rs 20 crore.

Hotels

  • Revenue: Rs 404.4 crore versus Rs 370.51 crore.
  • EBIT: Rs 55 crore versus Rs 42 crore.

Agriculture

  • Sales: Rs 1,531 crore versus Rs 1,671.92 crore.
  • EBIT: Rs 233 crore versus Rs 237 crore.

Paper

  • Sales: Rs 1,280 crore versus 1,335.82 crore.
  • EBIT: Rs 268 crore versus Rs 246 crore.

ITC’s segmental revenues are not comparable due to the introduction of the Goods and Services Tax regime.

Shares of ITC rose as much as 1.5 percent to a four-month high of Rs 277.5 apiece after the earnings announcement.

ITC trades at 32.4 times trailing 12-month earnings per share and 29 times its estimates for the coming year, according to Bloomberg data. The stock rose 8.9 percent last year, compared to 27.91 percent advance in the benchmark S&P BSE Sensex Index.