ITC drops after muted Q4 outcome

ITC fell 2.57% to Rs 320.05 at 09:20 IST on BSE after net profit rose 3.65% to Rs 2361.18 crore on 1.66% increase in total income to Rs 9663.15 crore in Q4 March 2015 over Q4 March 2014.

The result was announced after trading hours on Friday, 22 May 2015.

Meanwhile, the BSE Sensex was down 70.81 points, or 0.25%, to 27,886.69

On BSE, so far 82,206 shares were traded in the counter, compared with an average volume of 8.93 lakh shares in the past one quarter.

The stock hit a high of Rs 322 and a low of Rs 319 so far during the day. The stock hit a record high of Rs 409.70 on 28 February 2015. The stock hit a 52-week low of Rs 312.40 on 23 June 2014.

India's largest cigarettes maker by sales has an equity capital of Rs 801.55 crore. Face value per share is Re 1.

ITC said that Q4 March 2015 performance was impacted by steep increase in excise duty and VAT on cigarettes and weak demand environment. Muted growth in net revenue was primarily due to lack of trading opportunities in agricommodities and continuing pressure on cigarette volumes. Excluding expenditure on CSR / social investment programmes, comparable profit before tax and net profit grew by 6.4% and 7.8% respectively in Q4 March 2015 over Q4 March 2014. Financials for Q4 March 2015 include Rs 58 crore towards costs associated with rationalisation of safety matches manufacturing operations.

The company delivered another year of steady performance in the backdrop of continuing sluggishness in the macro-economic environment, exacerbated by a steep increase in taxes/duties on cigarettes which led to unprecedented pressure on legal cigarette industry sales volumes, ITC said. The company also had to contend with start-up costs relating to the launch of new products and categories in the non-cigarette FMCG segment, input cost pressures in the paperboards, paper and packaging businesses and a weak pricing environment in the hotels business, it added.

ITC said that the legal cigarette industry in India continues to be impacted by a punitive taxation and discriminatory regulatory regime. The operating environment for the legal cigarette industry in India was rendered even more challenging last year, with two rounds of sharp increase in excise duty -- in July 2014 and February 2015. This includes a cumulative increase of 115% on filter cigarettes of 'length not exceeding 65 mm', which has widened the price differential between legal and illegal cigarettes and made it extremely difficult for the legal cigarette industry to counter the unabated growth of illegal cigarettes in the country, ITC said. Notwithstanding the challenging regulatory and taxation environment, the company strengthened its product portfolio across segments to reinforce its leadership position in the industry, ITC said.

ITC has a diversified presence in cigarettes, hotels, paperboards & specialty papers, packaging, agri-business, packaged foods & confectionery, information technology, branded apparel, personal care, stationery and other FMCG products. ITC is a market leader in cigarettes.

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