ITC Limited, India's tobacco major, has posted a net profit of Rs 3,336 m for the quarter ended September 30, 2001 (up 33% YoY). The company continues its relentless drive to improve operating margins even in this quarter. These margins stand at 43% (up 40 basis points YoY) in 2QFY02.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
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No. of Shares (eoy) (m)
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The highlight of this performance is a 10% growth in the company's topline. The company had only managed a 4% turnover growth in the first quarter of the current year. The improvement in topline is an encouraging sign for ITC. Its other income has also improved by 68% YoY, indicating that its subsidiaries are finally contributing to its income.
The company has regrouped some figures for last year. As per the regrouped figures, the net profit in 2QFY01 is 2,586 m. Thus the bottomline growth YoY becomes 29% as per this number. The company's moves to reduce its debt is bearing fruit. Its interest burden has gone down by 37% during the quarter. Its tax provision has declined due to a tax write back this quarter.
ITC has approved the amalgamation of ITC Bhadrachalam Paperboards with the company, with effect from April 1, 2001. The merger ratio has been fixed at one equity share of ITC for every 16 shares of ITC Bhadrachalam. For details of the financial effects of this move read ITC: Merger concerns
ITC's current performance is heartening as the company has once again shown that it knows its business quite well and its improving operating efficiency is a testimony to this. The rise in other income has also given rise to hopes of that its investments in hotels and retailing may be bearing fruit.
However, ITC's moves to merge with ITC Bhadrachalam would change its earnings outlook and thus is earnings ratings. There is every likelyhood that in future ITC would also merge ITC Hotels with itself. Though these moves are in the right direction given the company's increasing focus and investments on hotels, paperboards, IT and retailing, these would make it a diversified company in the long run. Thus, in future, its consolidated operating margins would deflate and so would its ratings.
At the current price of Rs 687 ITC trades at a P/E of 13x annualised FY02 earnings (excluding ITC Bhadra numbers). We have yet to incorporate the merger effects in our projections.
ITC Ltd has announced third quarter results of the financial year 2016-2017 (3QFY17). The company has reported 4.7% YoY and 5.7% YoY growth in revenues and net profits respectively. Here is our analysis of the results.
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