ITC Ltd's net profit rises 6% to Rs 5,088 crore in December quarter, announces interim dividend

The revenue from operations surged 6.66 percent to Rs 21,706.64 crore in the reported quarter over Rs 20,349.96 crore in the year-ago period

ITC Ltd’s net profit rose 6.4 percent to Rs 5,087.87 crore in the December quarter, compared to Rs 5,436.3 crore in the same period of the previous financial year, the company said in a stock filing on January 29.

The company had reported a net profit of Rs 5,051.57 crore in the September quarter, the stock filing showed.

The revenue from operations surged 6.66 percent to Rs 21,706.64 crore in the reported quarter over Rs 20,349.96 crore in the year-ago period, the filing showed. The revenue stood at Rs 21,255.86 crore in the July to September period.

The company also announced an interim dividend of Rs 6.5 per ordinary share of Re 1 each, the filing said.

The FMCG major credited low inflation and resilient rural demand for the positives in the third quarter of the current financial year. In addition, it said the India-EU trade deal will boost growth further.

"Benign inflation, resilient rural demand and acceleration in credit growth were some of the key positives during the quarter. Reduction in interest rates & liquidity support by RBI, lower inflation, income tax cuts along with front loading of government expenditure, reduction in GST rates across a wide range of products and the India-EU Free Trade agreement augur well for economic growth, ITC said in a statement.

Segment results

Standalone cigarette business’ revenue rose 8 percent year-on-year to Rs 8,791 crore in the December quarter.

Commenting on the revised duties on cigarettes, the company said, "The changes in GST and excise duty rates announced recently, have led to an unprecedented increase in tax incidence on cigarettes. Such a steep increase will provide further impetus to illicit trade and cause immense hardship and loss to millions of farmers, MSMEs, retailers, local value chains nurtured by the industry and the Exchequer."

Starting February 1, government is implementing a major overhaul of cigarette taxation, wherein existing GST compensation cess will be replaced by a new additional excise duty alongside a hike in the standard GST rate to 40 percent.

ITC said that the legal cigarette industry continues to engage with policymakers for a framework of pragmatic, equitable, non-discriminatory, evidence-based regulations and taxation policies that balance the economic imperatives of the country and tobacco control objectives, cognising for the unique tobacco consumption pattern in India.

The company added that it will the cigarettes business will continue to invest in its powerful trademarks & well-laddered product portfolio, innovation capacity, manufacturing excellence, integrated seed-to-smoke value chain, and world-class last mile execution capability to reinforce its market standing

Meanwhile, the FMCG-others business, which owns brands such as Aashirvaad, Sunfeast and Fiama, reported revenue of Rs 6,020 crore, up 11.1 percent year-on-year on a standalone basis bed by growth in staples, biscuits, noodles, dairy, premium personal wash, homecare & agarbattis. ITC flagged strong performance in  premium portfolio and NewGen channels, while digital-first & organic portfolio record 60 percent YoY growth in the quarter.

Revenue from the agri business increased 6.3 percent year-on-year to Rs 3,560 crore, led by value added agri products & leaf tobacco.

Revenue from the paperboards, paper and packaging business rose 2.7 percent to Rs 2,202 crore. However, overall Industry remains impacted by low-priced supplies, high wood prices & subdued realisations, ITC said.