ITC Q3 profit up 21 percent as cigarette volumes improve

MUMBAI Fri Jan 18, 2013 1:22pm IST

A man talks on his mobile phone as he walks past an ITC office building in Kolkata September 4, 2012. REUTERS/Rupak De Chowdhuri/Files

A man talks on his mobile phone as he walks past an ITC office building in Kolkata September 4, 2012.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - India's biggest cigarette maker, ITC Ltd (ITC.NS), beat estimates with a 21 percent rise in quarterly profit as cigarette volumes improved after four quarters of stagnant growth, aided by the launch of low-cost products during the quarter.

The company's net profit rose to 20.5 billion rupees for the quarter ended December 31. Net sales rose 23 percent to 76.3 billion rupees.

Higher taxes and tighter anti-smoking regulations in several Indian states have impacted sales of the company, which makes four out of every five cigarettes sold in India.

Cheaper smokes improved volume growth by 2-3 percent after a marginal increase of 0.4 percent in the previous quarter, according to three analysts briefed by the company. ITC does not provide details of sales volumes in its earnings statements.

"The cigarette industry in India continues to be impacted by a discriminatory taxation and regulatory policy framework, the company said in a statement.

"The high incidence of tax on cigarettes has created tax arbitrage opportunities leading to the growth of illegal cigarettes in the country. Consequently, legal industry volumes have come under severe pressure," the statement said.

ITC, which is 30.8 percent owned by British American Tobacco PLC (BATS.L), generates about half its revenue from cigarettes. The company also owns hotels and makes products including soap and shampoo. It said net sales from its non-cigarette consumer business grew 30 percent to 17.8 billion rupees.

"The non-cigarette business has shown a good jump. This is a good sign because the company has been focusing heavily on diversification," said Naveen Trivedi, an analyst with Karvy Stock Broking Ltd. in Mumbai.

Shares in ITC, a staple for fund portfolios that consider it recession-proof, rose as much as 1.6 percent after the results, after falling more than 10 percent in the past month.

The stock trades at 25.5 times its 12-month forward earnings, compared with peers Hindustan Unilever's (HLL.NS) 28.5 times, and Godrej Consumer's (GOCP.NS) 26.5 times, according to Thomson Reuters Starmine Smart Estimate.

(Reporting by Nandita Bose; Editing by Matt Driskill)

FILED UNDER:

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage