ITC net surges 27%; bonus issue likely

ITC net surges 27%; bonus issue likely

Kolkata: Net profit at ITC Ltd jumped 27% to Rs1,028.22 crore in the three months to 31 March, driven by robust growth in cigarettes and farm commodity businesses. Net revenue rose 28% during the quarter to Rs5,053.80 crore, compared with the same period last year, largely due to an 18.5% growth in cigarette sales and an 87.9% increase in earnings from farm goods such as tobacco leaves.

ITC said on Friday its board would meet on 18 June to consider issuing bonus shares and that it would pay a centenary dividend of Rs5.50 a share, taking the total dividend payout for the fiscal to Rs10. ITC, which turns 100 in August, had last issued bonus shares in 2005.

For the year, ITC’s net revenue at Rs18,153.2 crore was 16.3% higher than FY09, while net profit at Rs4,061 crore was 24.4% higher.

“The results are largely in line with expectations, but the 34% growth in revenue from consumer goods (other than cigarettes) in the January-March quarter was most impressive," said Anand Shah, senior research analyst at Angel Broking Ltd. Net revenue from ITC’s non-cigarette consumer goods business in the January-March quarter was at Rs1,122 crore. Loss in the segment during the quarter declined to Rs78.70 crore from Rs117.30 crore in the same period last year. In the quarter to December, ITC posted a loss of Rs86 crore in this business.

Cigarette sales during the year expanded 19.8% to Rs9,321.15 crore, which is a little more than half of ITC’s total revenue. Cigarettes contributed Rs4,938.12 crore, or 82% of ITC’s Rs6,015.31 crore pre-tax profit for the year.

Notwithstanding price hikes, ITC’s cigarette sales might have grown 8-9% by volume in the quarter ended 31 March, Shah said, but “the April-June quarter is crucial" because there were substantial price hikes in the past two months.

In FY10, several states increased value-added tax on cigarettes from the consensus rate of 12.5%, ITC said in a statement, adding “some states (had also) levied entry tax...and some others increased the entry tax rate".

ITC’s hotel business didn’t do well in FY10; its net revenue during the year declined 9% from the previous year to Rs910.8 crore. Pre-tax profit for the full year was 31.5% lower at Rs216.64 crore.

Though revenue from farm products grew 87.9% in January-March to Rs988.1 crore, sales during the full year remained flat from FY09 at Rs3,862.14 crore because of “rationalization of the agri-commodity portfolio (in view of) policy interventions and volatility in the commodity markets", ITC said.