About The CompanyThe established brand has diversified business including Paper , Hotels , Cigarette , FMCG etc.The stock of the company has not performed in the recent rally in comparison to other front line stocks.This stock has been included in heavy weight stock category in both the exchange namely BSE & NSE due to its high market Capitalization and strong base of the company.
About The Financials
The company has posted the results for the second quarter ending 30/09/2008 a 15% rise in revenue, pre-tax profits at Rs. 1189 crores registered a subdued growth of 4.9% over the same period last year. Post tax profit at Rs. 803 crores grew by 4.1%. Steep increases in commodity prices and store rentals, the brand building costs of the new Personal Care portfolio and the significant investments in enhancing distribution capability combined to exert intense pressure on profitability during the quarter. Cigarette major, ITC once again faced the brunt of the higher tax it had to dole out on cigarettes. The ban on non-filter cigarettes also did not help matters.Net Turnover at Rs 3763 crores registered a growth of 15%.The main growth propeller was non-cigarette FMCG business, comprising packaged foods, garments, stationery, matches, incense sticks and personal care products, witnessed a 30% growth in revenues. The paper and packaging business suffered a drop of 3% due to rise in prices of pulp and waste paper. The company’s hotel business, too, suffered due to the slowdown in the economy and a decline in the travel industry. Its agri business revenues grew by 17%, driven by a growth in leaf tobacco exports. The leaf tobacco crop from Andhra witnessed an unprecedented spurt in prices with rates increasing by more than 80% on the back of demand supply mismatch.
The Govt’s ban on smoking in public places too will have an effect on the bottomlines of the company in the coming months. With so many businesses of ITC, one wonders why ITC remains in cigarettes despite the atmosphere for making cigarettes being non-conducive. The company has explained that it has ventured into FMCG to dilute the effect of cigarettes but it would stick to the cigarette business since it was legal and provides resources required to enter new businesses in future. The company will be able to maintain its performance in the current circumstances only if its able to increase the share of its non-cigarette businesses.
Due to overall bad sentiment in the market the stocks is showing new lows and providing a great opportunity to get into the stock at most reasonable price.
Disclaimer : I do not have any personal holding in this stock.