ITC net profit up 16.75% at Rs3,090 cr in Q3

ITC Ltd has reported a 16.75-per cent year-on-year increase in its standalone net profit for fiscal third quarter to Rs3,090.20 crore while its revenue (ie, gross sales value net of rebates / discounts) for the period stood at Rs16,746.20 crore, representing a growth of 6.3 per cent.

Earnings before interest, tax, depreciation and amortisation (EBITDA) stood at Rs3,904.50 crore, showing a healthy growth of 10.1 per cent during the quarter.

Exceptional Items during the quarter represent provisions for earlier years of Rs412.90 crore (Rs270 crore post tax) in respect of Tamil Nadu entry tax that have been written back based on a favourable order of the Supreme Court.

Profit before tax at Rs4,629.55 crore and net profit at Rs3,090.20 crore showed growth of 17.1 per cent and 16.8 per cent, respectively, during the quarter. Earnings per share for the quarter stood at Rs2.54 (Rs2.18 in Q3 FY '17).

ITC said the current quarter is not comparable with the year-ago quarter as the figures are stated after adjusting for GST for the current quarter, while the same was reported before providing for excise duty a year ago.

ITC said its tax expenses grew 17.8 per cent to Rs1,539.35 crore against Rs1,307.47 crore a year ago, according to a stock exchange filing. ITC said the legal cigarette industry volumes were under severe pressure due to a sharp increase in tax incidence under the GST regime.

''The sharp upward revision in the GST compensation cess on July 17, 2017, exacerbated the situation,'' it stated. ''Cigarette volumes for the quarter are estimated to have fallen by about 3%, in line with our estimate,'' said Sameer Deshmukh, senior research analyst, Reliance Securities.

Operating profit from the cigarette business rose by close to 8 per cent y-o-y to Rs3,269.25 crore. Other FMCG businesses posted an operating profit of Rs46.99 crore against an operating loss of Rs19.66 crore a year ago, aided by an 11.8 per cent y-o-y growth in revenue from this segment. Deshmukh said the reported net profit of ITC was higher by 16.8 per cent mainly due to the exceptional income pertaining to reversal of entry tax levied by Tamil Nadu. ''Excluding the same, net profit was in line with our estimate,'' he added.

On its other FMCG business, the company said, ''Positive swing of Rs 67 crore in segment profit is driven by enhanced scale and market standing, product mix enrichment and cost management initiatives.''

''It may be recalled that the base quarter (Q3FY17) had witnessed reduced consumer offtake and trade pipelines in the wake of adverse liquidity conditions.

The company's FMCG-other businesses were relatively less impacted (revenue grew by 3.4 per cent over Q3FY16) during the quarter. During Q3FY16, the hotel segment showed improved performance. ''Increase in ARR (average room rate), robust growth in food & beverage revenue aided segment revenue to grow by 10% on a comparable basis in the quarter. Improvement in room rates and operating leverage aided faster growth of approx 30% in segment results, notwithstanding gestation costs of ITC Grand Bharat and the recently commissioned WelcomHotel Coimbatore,'' the company's statement added.

It further said the agri business performance was impacted by limited trading opportunities in agri commodities, shortage and poor quality of AP leaf crop, lower export incentives and relative strength of the Indian rupee, while the  paperboards, paper and packaging segment's profit rose 9 per cent due to higher volumes, imported pulp substitution and "benign input costs."