MUMBAI (NewsRise) -- ITC, India's largest cigarette maker, reported a better-than-expected third-quarter net profit, aided by growth in its tobacco and consumer businesses.
The company, also known for its Maurya hotel chain, said consolidated net income for the quarter ended in December rose 3.9% to 32.1 billion rupees ($450 million). Analysts were expecting ITC to report a net income of 31.34 billion rupees, according to Refinitiv data.
The year-earlier quarter had exceptional items worth 4.13 billion rupees on account of a write back of certain provisions. Revenue from operations rose 15% to 113.40 billion rupees.
The growth was driven by increased scale, improved product-mix, and cost control measures, ITC said in a statement. The company witnessed an increase in input costs amid sustained investments in new businesses and start-up costs of new facilities, it added.
Still, the cigarette business continues to tackle an "extremely challenging operating environment," ITC said.
Sales from the cigarette business, which accounts for more than three-fourths of ITC's operating earnings, rose more than 9.6% to 50.73 billion rupees. Operating earnings at the unit grew 8.8%.
ITC is rebounding from a prolonged period of tax increases that spurred illegal trade, and a regulatory clampdown on smoking. Indian authorities have been trying to create public awareness on tobacco-related health issues, launching anti-smoking campaigns and forcing companies to display larger graphic images on cigarette packs. The $11 billion Indian cigarette market is dominated by three players with ITC at the top followed by Godfrey Phillips India and VST Industries, according to brokerage Anand Rathi.
ITC's sales volumes increased 5% in the quarter, ICICI Direct said in a report. "The company should be able to end the year at a full year volume growth of 4%-5%," it said.
The brokerage expects ITC to end the year with operating margins of 6% as the fourth quarter is the most profitable for the company.
Sales in the consumer business, which includes branded packaged goods, apparels, and personal care products, rose more than 11% in the quarter. Consumer goods companies in India are riding on the revival in demand from rural areas after a reasonably good distribution of monsoon rains that helped boost farm incomes.
Shares of ITC lost 4.2% in Mumbai trading, while the benchmark S&P BSE Sensex edged 0.9% lower.
--Dhanya Ann Thoppil