ITC declines ahead of June quarter results

Shares of ITC have dipped 3% at Rs 301 on the National Stock Exchange (NSE) ahead of its April-June quarter (Q1) results tomorrow.

Analysts on an average is expected the cigarettes major will report 10% year-on-year (YoY) increase in net profit at Rs 240 crore and single digit growth in net sales at Rs 945 crore for the recently concluded quarter.

ITC’s cigarette volumes are likely to disappoint—to fall around 16-17% YoY (declined 13% in Q4FY15), owing to fresh price hikes.

“We expect ITC's YoY cigarette volumes to decline 18% this quarter as volume generating brands like Gold Flake Premium and Classic have declined 20/10% YoY, respectively,” said analyst at Antique Stock Broking said in a report.

According to Edelweiss Securities, demand scenario remains subdued across segments for ITC. Cigarette volumes are expected to worsen due to fresh price hikes and hence we have assumed a volume decline of around 16-17% YoY on a base of decline in volumes by 3% YoY (13% YoY volume decline in Q4FY15 on a base of decline in volumes by 2% YoY) while price hike is expected at around 16% YoY.

We expect cigarette volumes to decline by c20% YoY due to steep YoY price hikes. The fast moving consumer goods (FMCG) business is expected to continue weak momentum but with better profitability. Agri-business and Paper are likely to see sequential improvement in growth rates. We expect sales/ net profit growth at 6%/5% YoY, said Anand Kumar, analyst at Bank of America Merrill Lynch in Q1 results preview.

At 03:09 PM, the stock was down 2.3% at Rs 304 on the NSE. A combined 6.01 million shares changed hands on the counter on the NSE and BSE.

Meanwhile, thus far in 2015, shares of ITC underperformed the market by falling 17% as CNX Nifty remains unchanged.

ITC Limited