ITC Ltd. (ITC), India’s largest maker of cigarettes, reported second-quarter profit that beat analyst estimates after increasing prices on some tobacco brands.
Net income for the maker of Wills cigarettes and Bingo snacks rose 22 percent to 18.4 billion rupees ($343 million) in the three months ended Sept. 30, from 15.1 billion rupees a year earlier, the Kolkata-based company said in a statement. This exceeds the 17.6-billion rupee median of 24 analysts estimates.
ITC raised prices of some cigarettes in September, Nazeeb Arif, a spokesman for the company said on Oct. 4. The price increases would have aided earnings, Naveen Vyas, an analyst with Microsec Capital Ltd. said in a telephone interview before the announcement.
“ITC will continue the same growth rate it is maintaining,” he said. “They have taken some price increases. The volume fall which will be there in the cigarettes segment will be compensated by the price hike.”
The stock gained 2 percent to 297.50 rupees in Mumbai today, the highest close since Bloomberg began compiling data.
Net sales for the company rose 20 percent to 71.5 billion rupees, from 59.7 billion rupees a year earlier, the statement said.
Sales of the company’s consumer products other than cigarettes, which include soaps, cookies, and packaged snacks rose 26 percent to 16.9 billion rupees, while revenue from the company’s hotels business grew 2.7 percent to 2.2 billion rupees.
ITC, which got about 63 percent of its sales from cigarettes in the year ended March, began selling ready-to-eat food in 2001, and added confectionery, staples and packaged snacks in 2003, in a bid to reduce dependence on its tobacco business.
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