Indian consumer goods major ITC posted a marginal rise in quarterly profit before exceptional items and tax on Thursday as price increases in its core cigarettes business cushioned the impact of higher taxes on the segment.
The company, which makes Gold Flake cigarettes, reported profit rose 2 per cent to 66.92 billion rupees (₹6,692 crore) ($695.63 million) in the March quarter.
The company had recorded a one-time gain of 151.79 billion rupees (₹15,179 crore) in the year-ago quarter following the demerger of its hotels business.
ITC implemented price increases across its cigarette brands following the government’s excise duty hike that came in effect in February, though the increases were calibrated to protect volumes.
However, analysts at Goldman Sachs said the price hikes of 20 per cent -40 per cent across key cigarette brands were lower than what would be required to fully offset the tax increase, implying some near-term pressure on margins.
Revenue in the cigarettes business, which accounts for the bulk of the company’s profits, rose about 32 per cent to 110.66 billion rupees (₹11,066 crore). Revenue from the company’s consumer goods segment, which houses brands such as Aashirvaad, Sunfeast and Bingo, rose 15 per cent to 63.04 billion rupees (₹6,304 crore).
Overall revenue climbed 17 per cent to 216.95 billion rupees (₹21,695 crore).
