Mumbai: India's biggest cigarette maker, ITC Ltd, said its fourth-quarter net profit grew 18 per cent, beating estimates, as price hikes and a pick-up in low-cost cigarette consumption boosted margins, even as sales volumes fell.
The company, nearly 25 per cent-owned by British American Tobacco, said in a statement net profit rose to Rs 2278 crore for the quarter ended on March 31 from Rs 1930 crore a year earlier. That was slightly ahead of the Rs 2216 crore analysts had forecast, according to Thomson Reuters Starmine Estimates.
Higher taxes and tighter anti-smoking regulations in several Indian states have cut into sales at the company, which makes four out of every five cigarettes sold in India.
Sales volumes fell 3 per cent as customers cut discretionary spending, but a sharper fall was arrested by cheaper smokes whose sales begun to pick up, according to three analysts briefed by the company.
"The upcoming federal budget will be key to finding out how the government decides to tax this category and which way volumes are headed for the rest of the year," said V. Srinivasan, analyst with Angel Broking.
Total revenue rose 12 per cent in the quarter to Rs 9145 crore from 8120 crore a year earlier. ITC generates about half its revenue from cigarettes, but also owns hotels and makes products including soap and shampoo. It said revenue from its non-cigarette consumer business grew 13 per cent to Rs 2310 crore.
Shares in ITC, India's fourth-biggest company by market value and a staple for fund portfolios, traded 0.4 per cent up after the results were released while the benchmark Mumbai index was up 0.78 per cent. ITC stock has risen about 7 per cent since the start of the year, while the BSE consumer index has risen 4 per cent.
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