Business Tantra

Shares of cigarettes-to-hotels major ITC were trading 2 per cent up at Rs 223 on the BSE in Friday’s weak intra-day trade. The stock has rallied 7 per cent in the past five trading days. Meanwhile, at 12:02 pm, the S&P BSE Sensex was down 1.5 per cent at 54,296 points.

In the past one month, the stock of ITC has gained 4 per cent, as compared to a 3 per cent fall in the Sensex. Moreover, in the past three months, it has risen marginally by 0.09 per cent as against a 6 per cent downfall in the benchmark index.

Further, over the past six months, the market price of ITC has rallied 5.5 per cent, as compared to a 7 per cent decline in the Sensex. The stock had hit a 52-week high of Rs 265.30 on October 18, 2021 and a 52-week low of Rs 199 on May 4, 2021.

For the October-December quarter (Q3FY22), ITC reported strong all-around revenue performance led by robust recovery across markets due to rise in mobility and efficient distribution system. Cigarettes staged a recovery with revenues at Rs 6,959 crore, compared with Rs 6,091 crore a year ago. Pre-tax profits from the segment stood at Rs 4,187 crore, compared with Rs 3,659 crore in the year-ago period.

The company’s cigarettes business was one of the worst impacted businesses in last two years due to Covid-19 disruptions. Cigarette business growth in the current quarter reflects that volumes surpassed pre-covid high levels. Margins of this segment rose 55 bps, driving 14 per cent year-on-year growth in earnings before interest and tax (EBIT).

Similarly faster growth in paperboard business also reflected demand recovery from the user industries. Though, FMCG business has grown at a slower pace of 9.3 per cent, it is still stronger growth compared to most other FMCG peers, according to ICICI Securities. The brokerage believes stable taxation on cigarettes would result in high growth in cigarette volumes in the medium term.

ITC continued to see an improvement in market standing, with innovation and interventions addressing gaps. Stability in taxes remains key for the industry to sustain steady volume growth and gains from illicit trades, said Emkay Global Financial Services said in a result update.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor