ITC: Concern over cigarette business profitability

Lower tax rate aided third quarter earnings; focus will now shift to the Budget

Akin to its peers, the cash crunch arising from the note ban impacted ITC’s results for the December 2016 quarter (Q3). However, even as results were in line with expectations, the key worry is whether ITC’s cigarette business growth will see a recovery. This is critical given the pressures in the business and the fact that it still accounts for more than 80-85% of the company’s profits.

Consider this: The cigarettes business continued to grapple with the tightening regulatory noose amid the note ban-driven demand pressures. Most of the 2% growth in this business was led by price hikes even