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Company Report

ITC

Is ITC on a new growth path' Net sales for the quarter was Rs 1,470.30 crore (Rs 1,102.42 crore) up 33 per cent from the year ago period. Its operating profit of Rs 572.28 crore was up 21 per cent from the year ago period and 1 per cent above the June quarter profit of Rs 568.45 crore.

OPM shrank to 39 per cent against 43 per cent during the same period last year and 40 per cent reported during the June quarter.

Still, net profit rose 14 per cent to Rs 380.50 crore (Rs 333.61 crore) while sequentially it went up 11 per cent over the June quarter profits of Rs 343.92 crore.

Sequentially after a poor June quarter during which its sales were down 18 per cent over the preceding quarter, the company has performed reasonably well with a 4 per cent growth in operational income.

At Rs 898.02 crore (Rs 628.83 crore), operational cost was up 43 per cent over the previous corresponding quarter. Sequentially the same went up 7 per cent over the June quarter’s Rs 839.57 crore.

Surprisingly though the rise in the costs have been proportionately higher than the increase in revenues, operating profit moved up by 21 per cent over the previous corresponding quarter to Rs 572.28 crore (Rs 473.59 crore). However, the OPM at 39 per cent was a percentage below the preceding quarter and much below the 43 per cent it reported during the previous corresponding quarter.

Other income has been consistently declining and at Rs 49.31 crore (Rs 64.85 crore) it was 24 per cent below the year-ago period. The decline in the other income has been somewhat balanced by the fall in interest cost which at Rs 8.43 crore (Rs 15.14 crore) was 44 per cent below the year-ago period, while sequentially too it came down by 1 per cent over the June quarter spending of Rs 8.55 crore.

The tax provisioning having gone up 14 per cent over the previous corresponding period to Rs 174.03 crore (Rs 152.21 crore) saw the net profit move up 14 per cent to Rs 380.50 crore (Rs 333.61 crore). There has been no significant change in the valuation of the company since the end of the June quarter and at Rs 667 the stock discounts its September quarter annualised EPS of Rs 61.49 by 11 times. If the overall growth and especially the growth from agri business is maintained for the December quarter, the stock will be headed for Rs 750.

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