Sales were up 24.9 per cent year-on-year (y-o-y) to Rs 9,164 crore -- ahead of Bloomberg consensus estimates of Rs 8,465 crore (Rs 84.65 billion) -- but the earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin fell 223 basis points to 35.4 per cent, short of expectations of 37.5-38.1 per cent.
Consequently, and partly due to higher tax rate, ITC’s net profit -- though up 15.6 per cent to Rs 2,186 crore (Rs 21.86 billion) -- came in a tad below expectations of Rs 2,217 crore (Rs 22.17 billion).
The cigarette business’ revenues grew 18.8 per cent y-o-y to Rs 4,201 crore and Ebit (earnings before interest and tax) margin was up 142 basis points to 64.8 per cent, largely driven by price rises.
Thus, its ebit jumped 21.4 per cent at Rs 2,722 crore (Rs 27.22 billion).
Abneesh Roy, associate director - institutional equities -- research, Edelweiss Securities, says cigarette volumes have fallen by three per cent, y-o-y.
While ITC might further raise cigarette prices in FY15 in view of the duty increase, the actual impact on volumes will depend on its strategy in the 64-mm segment, which has seen a duty hike of 72 per cent.
However, given ITC’s track record, analysts expect a healthy profitable growth in this business.
The key disappointment came from the fast-moving consumer goods (FMCG) business, which reported a Rs 16-crore (Rs 160-million) loss at Ebit level.
Although the loss was lower than Rs 19 crore (Rs 190 million) in the year-ago period, analysts were expecting a profit of Rs 20-25 crore (Rs 200-250 million).
Part of this can be attributed to muted revenue (Rs 1,935 crore) growth of 10.9 per cent, the lowest in the past 10
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