Business
India's ITC profit rises on cigarettes business growth, rural market strength
India's ITC profit rises on cigarettes business growth, rural market strength
About this update from Itc Hotels Ltd
Indian consumer goods major ITC NSE:ITC reported a rise in fourth-quarter profit on Thursday, powered by strength in its mainstay cigarettes business and resilient rural demand.The maker of "Yippee" instant noodles and "Gold Flake" cigarettes reported a standalone profit before tax and exceptional items of 64.17 billion rupees ($746.65 million) for the quarter ended March 31, compared with 62.88 billion rupees a year earlier.ITC's cigarettes business, which generates the highest revenue, grew nearly 6%, benefiting from price hikes, improved volumes in competitive regions and premium offerings that are generally margin-boosting.In the consumer goods segment, a steady recovery in rural demand backed by good monsoon has been partly cushioning the impact from soft consumption in urban areas on account of high cost of living in metros.ITC said it has been boosting its rural market penetration by expanding the network of stockists over the last three years.Revenue from the company's consumer goods segment, which houses popular household brands such as Aashirvaad, Sunfeast and Bingo, rose 3.7% to 54.95 billion rupees.However, profit before tax in the segment fell nearly 28% due to "severe inflation" in costs of staple commodities such as wheat and cocoa and high marketing expenses, ITC said.Elevated input costs and muted urban demand have led to weak fourth-quarter profit for rivals Hindustan Unilever NSE:HINDUNILVR and Nestle India NSE:NESTLEIND.ITC said it has been increasing prices to combat rising costs.Its standalone revenue from operations grew 9.4% to 184.94 billion rupees.The company recorded a one-time gain of 151.79 billion rupees after the demerger of its hotels business, ITC Hotels NSE:ITCHOTELS, which listed as a separate entity in late January.($1 = 85.9440 Indian rupees)