ITC Q4 net profit up 12% to ₹2,669 cr

FIRM SAYS IT BEAT SLUGGISH DEMAND TO REGISTER A 6.6% GROWTH IN GROSS REVENUE AND A 9.4% GROWTH IN NET PROFIT FOR THE FULL YEAR, WHICH JUMPED TO ₹57,434.37 CRORE

Cigarettes and consumer goods maker ITC Ltd reported a 12.1% increase in fourth-quarter net profit on Friday, helped by excise duty savings and a “modest recovery” in consumption after “severe disruption” in the December quarter due to demonetisation.

Net profit jumped to ₹2,669.47 crore, or ₹2.19 per share, in the March quarter, from ₹2,380.68 crore, or ₹1.96 per share a year earlier, helped by savings of nearly ₹500 crore in excise duty.

Gross revenue grew 6.1% to ₹15,410.92 crore in the quarter from ₹14,510.01 crore a year earlier, despite “persistent weakness in the wholesale channel and rural markets”, the company said in a statement.

ITC’s shares rose to hit a 52-week intraday high of ₹313.40 each, before closing 3% higher at ₹308.65 on BSE.

Excise duty payout for the quarter was at ₹3,883.28 crore compared with ₹4,382.08 crore a year ago, a decline of 11.3%.

ITC’s earnings were in line with analyst expectations.

Broking firms such as HDFC Securities Ltd, Credit Suisse India Pvt. Ltd, Kotak Securities Ltd, Edelweiss Securities Ltd and Motilal Oswal Securities Ltd had in separate research reports said ITC was expected to report a net profit of ₹2,578-2,816 crore for the March quarter.

ICICI Securities said in a report on Friday that ITC’s operating profit margin for the March quarter remained flat, and that it was around 125 basis points lower than its estimates.

The decline in excise duty payout possibly indicates a substantial section of smokers had switched to 64mm cigarettes, which attract lower excise duty, said ICICI Securities.

ITC said it beat sluggish demand to register a 6.6% growth in gross revenue and a 9.4% growth in net profit for the full year. Gross revenue for jumped to ₹57,434.37 crore from ₹53,713.83 crore.

Net profit for the year was ₹10,200.9 crore, or ₹8.38 per share, compared to ₹9,328.37 crore, or ₹7.70 last year.

Revenue from cigarettes at ₹8,954.94 crore was up 4.8% yearon-year, but pre-tax profit from the segment at ₹3,258.76 crore jumped 7.95% as operating profit margin expanded by 107 basis points to 36.39%.

The cigarette business was hurt by a “steep increase in taxation, intense regulatory pressures and tight liquidity conditions in the wholesale channel”, ITC said in a statement.

Revenue from other consumer goods at ₹2,885.76 crore was up 6.4% year-on-year but pre-tax profit from the segment plummeted 29.3% from the previous year to ₹55.56 crore.