InvestorQ : How do you see the price impact on ITC after the Mar-20 results announcement?
indhumathi Sayani made post

How do you see the price impact on ITC after the Mar-20 results announcement?

Answer
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shrinidhi Rajan answered.
4 months ago


ITC reported 6.5% growth in net profits at Rs.3797 crore for the Mar-20 quarter, largely on the back of lower tax cost following the decline in tax rates announced last September. ITC also benefited from robust operating performance in FMCG segment which saw genuine operating uptick in the aftermath of the COVID-19 scare.

ITC reported 6.4% lower revenues at Rs.11,420 crore after production schedules were largely disrupted due to nationwide lockdown. Of course, only the last week of March really would have impacted this quarter. This also led to the EBITDA of ITC falling by 8.9% at Rs.4164 crore. Full year EBITDA was up by 30% on a YOY basis.

The staple cigarettes business reported 6.5% fall in revenues to Rs.5131 crore even as its operating profits fell by 11.7% to Rs.3403 crore. However, the FMCG business showed a 12.6% jump in EBIT despite a 2.8% fall in revenues. This would be an important trend, if sustained, in reducing the dependence of ITC on cigarettes, which is almost 45% today.

Clearly, the future could be brighter for ITC as it has strategically used the lockdown to underline its focus on hygiene products. ITC launched two products under the Savlon brand viz. Savlon Hexa, an advanced hand sanitizer, and a surface disinfectant spray. This could help ITC in its big focus shift out of the traditional cigarettes business.