Cigarette packs at a local shop. (Photographer: Anirudh Saligrama/BloombergQuint)

Q3 Results: ITC’s Profit Meets Estimate, Margin Contracts

ITC Ltd.’s profit rose at the slowest pace in seven quarters because a tax write-back had aided its earnings in the year-ago period.

Net profit rose 4 percent year-on-year to Rs 3,209 crore in the quarter ended December, the country’s largest cigarette maker said in an exchange filing. That’s in line with the Rs 3,129 crore consensus estimate of analysts tracked by Bloomberg.

The company’s bottom line had benefited from an exceptional gain of Rs 413 crore in the same quarter last year. Excluding tax write-back in the year-ago period, net profit rose by 13.7 percent.

Revenue rose 15 percent on a yearly basis to Rs 11,227.7 crore. That compares with the estimated Rs 10,881 crore.

Operating income, or earnings before interest, tax, depreciation and amortisation, rose 11 percent year-on-year to Rs 4,326.26 crore—the consensus estimate was Rs 4,373 crore. Its operating margin contracted to 38.5 percent from 39.8 percent against the 40.2 percent forecast. That was largely because raw material costs rose 16 percent year-on-year to Rs 3,415 crore during the quarter.

Segment Performance (YoY)

Cigarette Business

  • Revenue up 10 percent to Rs 5,073 crore.
  • EBIT margin at 70.1 percent versus 70.6 percent.

FMCG – (Excluding Cigarettes)

  • Revenue rose 11 percent to Rs 3,200 crore.
  • EBIT margin at 2.4 percent versus 1.6 percent.


  • Revenue up 12 percent at Rs 452 crore.
  • EBIT margin at 13.3 percent versus 13.6 percent.


  • Revenue increases 26 percent to Rs 1,925 crore.
  • EBIT margin at 10.3 percent versus 15.2 percent.


  • Revenue rose 20 percent to Rs 1,542 crore.
  • EBIT margin at 21.5 percent versus 20.9 percent.

ITC has put its investments in the right direction, Mayuresh Joshi, fund manager (PMS) at Angel Broking, told BloombergQuint in an interaction. “ITC’s business strategy would yield results in the next few quarters,” he said. “One can expect the company to benefit with a long-term view as the disbursements and return on invested capital will benefit it, considering the kind of goods they are bringing out.”

“ITC would have to ramp up other FMCG business to probably take out the impact that cigarette business has on EBIT,” he said. Joshi was cautious about the outcome of the upcoming budget, which he expects to be critical for the FMCG space.

Shares of ITC erased gains and fell as much as 4.3 percent, the most in nearly a year, after the results announcement. That compared with a 0.83 percent decline in the benchmark NSE Nifty 50 Index.