ITC share price soar 3% despite a weak fourth quarter

• ITC share price was trading at ₹197.65 after hitting an intraday high of ₹ 201.15 at 9:15 am, on June 29
• The cigarettes, consumer products and hotel chain owner reported an 8.3% rise in its net profit for the fourth quarter ended March 31.
• The company shares fell by 3% down ahead of the earnings.
• The total revenue was down 6.8% year-on-year.

ITC share price surged over 3% in the early trade today, despite posting weaker earnings in the fourth quarter ended March 31. The share price was trading at ₹197.65 after hitting an intraday high of ₹ 201.15 at 9:15 am.

The revenue from cigarettes for ITC declined almost 6% to ₹5,750 crore in the fourth quarter, as people opted to smoke less after news reports surfaced on the internet that smokers are more vulnerable to contracting COVID-19.

ITC generates over 44% of the profit from FMCG business which includes its cigarettes segment as well.

*Jan-March 2020
Overall earnings for the quarter were better than expected

ITC reported around 8.3% rise in its net profit to ₹3797 crore for the fourth quarter ended March 31 boosted by the lower tax rate. Analysts at Edelweiss had expected its fourth-quarter profit to fall over 10%.The company shares fell by 3% down ahead of the earnings.

The total revenue was down 6.8% year-on-year to ₹11,420 crore during the period, the company said.

The next quarter may be worse

For ITC, the lockdown has brought in one too many challenges ranging from a decline in its cigarette volumes due to hike in excise duty and Covid-19 lockdown to its hotel business which has taken a massive hit.

As the cigarettes are not listed as an essential commodity, the production units of ITC were halted during lockdown resulting in empty shelves in local shops.
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