MUMBAI: ITC, India’s biggest cigarette maker, posted 10 per cent rise in its net profit for the quarter ended December 31, 2014 to Rs 2,635 crore compared with Rs 2,385 crore a year earlier, helped by a rise in other income to Rs 582 crore from Rs 391 crore.
ITC said profit was impacted due to slowdown in cigarettes and fast moving consumer goods (FMCG). The company’s performance for the third quarter of FY15 reflects the full impact of the steep hike in excise duty on cigarettes announced in the 2014 budget, and a sharp increase in VAT on cigarettes by Tamil Nadu, Kerala and Assam effected in the quarter.
Cigarette segment revenue, as a consequence, remained flattish during the quarter compared to same period last year. Total income from operations rose to Rs 8,942 crore in the December quarter compared with Rs 8,726 crore a year earlier. The company’s shares fell 5 per cent to Rs 352.60 per share.
“ITC’s third quarter revenue disappointed as cigarette net sales growth underperformed our estimates and, company reported weaker-than expected growth in other segments as well,’’ said Ritwik Rai, FMCG analyst at Kotak Securities.
“We believe ITC has suffered double-digit (percentage terms) volume decline in the quarter, in the cigarette segment.’’
The miss on revenue (especially cigarettes) has led to an EBITDA miss of 6% versus our estimates, said Rai. Shares of ITC were trading at Rs 354.85 apiece on the BSE in afternoon trade, down 4.40% from its previous close.