ITC cigarette profits may fall 29 per cent in September quarter
Brokerages expect higher taxes to impact cigarette volumes and margins as the company reports earnings on Monday.
ITC is expected to report its September-quarter earnings on Monday, November 2, amid forecasts of declining profitability in its cigarette segment, according to The Economic Times.
Analysts suggest that a new tax regime is weighing on the cigarette business, which is the company's largest profit contributor. JM Financial estimates that cigarette volumes could drop by 8 per cent year-on-year, while segment EBIT may fall by 29 per cent.
Nuvama Equities projects a 20 per cent year-on-year decline in consolidated EBITDA, with margins expected to contract by 619 basis points to approximately 28.5 per cent. The brokerage also expects consolidated revenue to decrease by 3 per cent.
Growth in other sectors may provide support. Nuvama forecasts 11 per cent revenue growth in the fast-moving consumer goods (FMCG) business, while the paper business could see a 32 per cent revenue increase.
The paper segment is expected to benefit from improved demand and the inclusion of the Century Pulp and Paper business, which has expanded manufacturing capacity by around 50 per cent, Nuvama noted.
The agricultural business is expected to show subdued growth, with Nuvama estimating a 3 per cent revenue increase and Motilal Oswal Financial Services forecasting a 2 per cent increase.