ITC profit up 22.5% in Q3 on higher prices - MINT
Jan 21, 2012
Aided by price hikes, net revenue rose 14.2% to Rs 6,247.84 crore but cigarette sales fell by volume
ITC Ltd said third quarter (Q3) profit rose 22.5% from a year earlier as it raised cigarette prices and boosted consumer goods sales.
Net profit rose to Rs 1,701 crore in the three months ended 31 December from Rs 1,389.08 crore a year ago, the company said in a statement. Though earnings were in line with analyst expectations, the stock fell 3.6% on BSE to Rs 201.35, while the benchmark Sensex gained 0.57%.
"Sales by volume (of cigarettes) have fallen because of the price increase, but margins have improved," said Himani Singh, a consumer goods analyst at Elara Securities (India) Pvt. Ltd. The firm seems to be bracing for a hike in excise duty in fiscal 2013, she said.
Operating income from cigarettes rose 20.3% from a year earlier to Rs 1,844.2 crore, and the segment yielded 81.4% of the company's pre-tax profit of Rs 2,476.66 crore. Operating margin from the segment expanded 176 basis points to 57.04%-the highest in recent times. One basis point is 0.01 percentage point.
ITC said its quarterly revenue from consumer goods other than cigarettes rose 24.37% over last year to Rs 1,370.72 crore, while it pared losses in the segment to Rs 46.63 crore- the lowest ever-from a Rs 73.6 crore loss in the year ago and Rs 55.9 crore in the three months ended 30 September.
"Investors should take heart from the sequential decline in the loss in the non-cigarette FMCG business despite new launches," said Rajesh Agarwal, head of research at brokerage Eastern Financiers Ltd. "We expect this segment to become profitable within a year."
