ITC sees 6% increase in revenue, 12% rise in net profit in Q4 2017

While volume growth is flat, analysts expect it to jump by 5 percent in FY18

Shruti Venkatesh
Published: May 26, 2017 05:42:00 PM IST
Updated: May 26, 2017 05:11:26 PM IST

I love a good story, be it through advertisements, movies or an entrepreneur who dared to think differently. I believe in bringing in fresh perspectives -- to a corporate profile or a Facebook post -- like new wine in an even newer bottle. I graduated with a journalism degree from the Xavier Institute of Communications. My weekend rituals involve watching Bollywood movies and reading up on style trends.

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FMCG major ITC Ltd, which had witnessed slow growth in the previous quarter owing to constant pressure on the cigarette industry and the impact of demonetisation, returned to the path of growth in the last quarter of 2017.

Revenue from operations for the quarter ended March 31, 2017, stood at Rs15,410.92 crore, a 6.20 percent increase from Rs 14,510.01 crore in the corresponding quarter last year. Net profit rose by 12.1 percent to Rs 2,669.47 crore from Rs 2,380.68 crore.

For the financial year ended March 31, 2017, revenues stood at Rs 57,434.37 crore, up by 6.92 percent from Rs 53,713.83 crore in FY16. Profits jumped by 9.35 percent to Rs 10,200.90 crore from Rs 9,328.37 crore.

“This is a good set of numbers,” says Abneesh Roy, associate director-institutional equities–research at Mumbai-based Edelweiss Securities Ltd.

Of the total revenue, cigarette sales contributed Rs 8,954.94 crore, up from Rs 8,545.46 crore in the same quarter, the previous year. Year-on-year, cigarette sales went up to Rs 34,001.98 crore, up from Rs 32,348.29 crore.

Roy says although it is a “flattish” volume growth in cigarettes and lower than the past three-four years, “it is a good number in the current context when tax rates have increased in the last year”. He adds that for cigarettes, most of the clarifications on GST have already come in. “It says tax neutral, so it is good news. Currently, in every state, the cost of cigarette and VAT rate are different. Now pan India, it will be a uniform rate of 28 percent. And the central excise will be replaced by cess soon. So on an overall basis, it is neutral.”

FMCG offerings like snacks, juices, stationery, and matches and agarbattis contributed Rs 2,885.75 crore for this quarter. This is a slight increase from Rs 2,710.78 crore in the same quarter last year. Meanwhile, the segment grew to Rs 10,511.83 crore year-on-year from Rs 9,731.17 crore last year.

“Margins also have expanded in cigarettes, hotels and paper. In FMCG also, both personal care and food have done well,” says Roy.

The hotels business contributed Rs 386.52 crore, up from Rs 362.99 crore in the same quarter in 2016. Year-on-year, it has jumped from Rs 1,286.17 crore to Rs 1,341.73 crore. Paperboards, paper and packaging grew to Rs 1,372.73 crore in Q4FY17 from Rs 1,315.03 crore, and year-on-year growth was Rs 5,382.86 crore from Rs 5,327.70 crore.

Roy says “while we have seen flat volumes in this quarter on a more adverse base, it is a decent achievement. In FY18, we expect 5 percent volume growth and 15-15 percent earnings growth.”

ITC stock price rose from Rs 241.61 as on May 26, 2016, to Rs 308.65 on May 26, 2017. The stock gained by Rs 8.95 (2.99 percent) on Friday and closed at Rs 308.65.

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