InvestorQ : Why did ITC report another disappointing quarter in Dec-20?
NISHA Nayak made post

Why did ITC report another disappointing quarter in Dec-20?

Priyanka N answered.
11 months ago

India’s foremost tobacco player and a significant player in FMCG and hotels space, ITC Ltd, reported another fall in profit after tax for the Dec-20 quarter by -11.3% on yoy basis. The net profit came in at Rs.3,527 crore due to higher excise burden and relatively lower tax credits available in the quarter.

Total gross revenues, i.e. gross of excise duty, for ITC were up 6.14% at Rs.14,124 crore on a consolidated basis. How did the sales end up being higher in a tough year? The sales boost can be partially attributed to the integration of Sunrise Foods, which the company had acquired during the year in Eastern India. Hence the numbers may not be exactly comparable on a yoy basis.

In Q3, cigarette revenues grew by just about 2.45% but other FMCG revenues were up 13%, which is perhaps a lot more encouraging news. Among the other business verticals, agri business showed growth while the hotels business and the paperboards business came under pressure during the December 2020 quarter.

Due to the pressure on the operations, the operating profit margins or the OPM for the Dec-20 quarter tapered from 34.11% to 30.95% on a yoy basis. PAT margins too tapered from 29.87% in the Dec-19 quarter to 27.97% in the Dec-20 quarter. Overall, it has been another disappointing quarter for ITC, considering the stock has already been under fundamental pressure for some time now.