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ITC share price soar 3% despite a weak fourth quarter

Jun 29, 2020, 11:49 IST
BCCL
  • ITC share price was trading at ₹197.65 after hitting an intraday high of ₹ 201.15 at 9:15 am, on June 29
  • The cigarettes, consumer products and hotel chain owner reported an 8.3% rise in its net profit for the fourth quarter ended March 31.
  • The company shares fell by 3% down ahead of the earnings.
  • The total revenue was down 6.8% year-on-year.
ITC share price surged over 3% in the early trade today, despite posting weaker earnings in the fourth quarter ended March 31. The share price was trading at ₹197.65 after hitting an intraday high of ₹ 201.15 at 9:15 am.
The revenue from cigarettes for ITC declined almost 6% to ₹5,750 crore in the fourth quarter, as people opted to smoke less after news reports surfaced on the internet that smokers are more vulnerable to contracting COVID-19.

ITC generates over 44% of the profit from FMCG business which includes its cigarettes segment as well.
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SegmentRevenue growthProfit growth
Cigarettes-6.4%-16.9%
FMCG others-2.7%7.40%
Hotels-8.6%9.40%
Agriculture-10%3.30%
Paperboards, Paper & Packaging-5.1%2%
*Jan-March 2020
Overall earnings for the quarter were better than expected

ITC reported around 8.3% rise in its net profit to ₹3797 crore for the fourth quarter ended March 31 boosted by the lower tax rate. Analysts at Edelweiss had expected its fourth-quarter profit to fall over 10%.The company shares fell by 3% down ahead of the earnings.
BI India

The total revenue was down 6.8% year-on-year to ₹11,420 crore during the period, the company said.

The next quarter may be worse

For ITC, the lockdown has brought in one too many challenges ranging from a decline in its cigarette volumes due to hike in excise duty and Covid-19 lockdown to its hotel business which has taken a massive hit.
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As the cigarettes are not listed as an essential commodity, the production units of ITC were halted during lockdown resulting in empty shelves in local shops.
SEE ALSO: ITC to acquire spices maker Sunrise Foods for estimated ₹1,800-2,000 crore
Hospitality industry mulls pay cuts and job cuts to tide over lockdown woes
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