ITC Q3 Review - Cigarette Business Continues To Face Headwinds: Dolat Capital

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Dolat Capital Report

ITC Ltd.’s Q3 FY21 revenue and adjusted profit after tax came in line with our estimates.

The cigarette business posted approximately 3.5% YoY growth, came in line. Our analysis suggests 7% plus volume decline in cigarette business.

A 790 basis points decline in margin in the cigarette business indicates that the product mix was unfavorable and economy brand contribution must have increased during the quarter.

Significant increase in duty has resulted in widening of price gap between ITC and smuggled cigarettes. We believe that this would continue to pressurise volume growth going ahead.

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