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ITC Q2 net profit falls 20 pc as high taxes keep margins in check

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ITC Q2 net profit falls 20 pc as high taxes keep margins in check

ITC Q2 net profit falls 20 pc as high taxes keep margins in check

ITC reported a 20% decline in standalone net profit for the September quarter despite a 45% increase in revenue. The rise in cigarette taxation significantly impacted profitability, forcing ITC to absorb part of the price hikes. Non-cigarette businesses showed strong growth, achieving the highest revenue growth in 14 quarters. Factors such as inflation and geopolitical tensions continue to affect the operating environment.

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Kolkata: ITC reported a 20% year-on-year (YoY) decline in standalone net profit to ₹4,137.1 crore for the September quarter, despite a 45% increase in revenue from operations to ₹28,317.7 crore, as an unprecedented increase in cigarette taxation weighed on profitability. Robust growth across its non-cigarette businesses, coupled with price hikes in the cigarette business following the tax increase, drove revenue growth. The non-cigarette fast-moving consumer goods business recorded its highest revenue growth in 14 quarters.

However, ITC absorbed part of the cigarette price increase to protect consumer demand and shift of sales to illegal or tax-evaded products, putting pressure on margins in its largest business and overall balance sheet.

The results were announced after market hours on Monday. 66%. In its earnings statement, ITC said the operating environment was marked by "heightened uncertainty amidst renewed geopolitical tensions and trade disruptions". Crude oil and crude-linked input prices remained elevated; supply chain disruptions and higher freight costs added to cost pressures.


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