ITC posts 3.85% jump in third quarter profit at ₹3,209 crore

NEWDELHI: ITC Ltd, India’s largest cigarette maker, on Wednesday reported a 3.85% increase in its December quarter standalone profit, backed by growth in the company’s cigarettes and consumer goods business.

Net profit rose to ₹3,209 crore in the three months ended December 31 from ₹3,090 crore in the year earlier, the company said. However, the company reported that in the corresponding quarter of last year it made a one-time gain of ₹270 crore. As such, profit for the quarter ended December 31 without considering exceptional items, represents a growth of 13.8%, it said.

Total income from operations of the maker of Sunfeast biscuits and Gold Flake cigarettes for the quarter grew by 15.7% from the year-ago period to touch ₹12,267 crore, according to a BSE filing.

The company’s revenue for the quarter was in line with analysts’ expectations, though margins, especially in the cigarettes business, fell below estimates.

Shares of the company dipped nearly 4% after its declared earnings for the quarter.

“Volume growth in ITC’s cigarettes business did not translate into double digit growth in EBIT (earnings before interest and tax). EBIT growth of 8.8% was marginally below our and street expectations,” said Abneesh Roy, senior vice president, institutional equities, at Edelweiss Securities. “Overall, the results are in line with our expectations in terms of revenue and slightly below expectations in terms of margin,” brokerage firm Anand Rathi said in a post-earnings note.

During the quarter, the cigarettes business of ITC grew by 9.6% to touch ₹5,073 crore. However, EBIT margin for its cigarettes business narrowed 50 basis points year-on-year to 70.1% during the quarter.

“Segment results during the quarter include the impact of escalation in input costs largely on account of consumption of higher cost leaf tobacco crop and increased salience of capsule cigarettes in the sales mix,” ITC said.

Meanwhile, the company’s consumer goods business put up a strong performance during the quarter with double-digit revenue growth.

The business comprising packaged foods, stationery and personal care products grew by 11.5% to ₹3,200 crore, the company said.