ITC share price soar 3% despite a weak fourth quarter

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.

Advertisement

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.
Advertisement


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
{{}}