ITC Slides As Second Wave Brakes Expected To Hit Cigarette Trade, Retail News, ET Retail

BENGALURU: Shares of cigarette-hotel conglomerate ITC Ltd fell nearly 3% on Wednesday, after the company warned that lockdown restrictions could cause disruption to its supply chain in the near future.

For fast-growing consumer goods (FMCG) companies like ITC, which sell everything from instant foods, snacks, groceries to cigarettes, the supply chain is a key part of operations, their allowing them to sell their wares across the country. A blow to the supply chain could potentially reduce volumes and sales.

The ITC warning on Tuesday came as its lucrative cigarette business barely managed to recover from last year’s nationwide lockdown, with March quarter revenue rising 14% to 5,850 crore. rupees ($ 799.10 million).

Cigarette volumes were slightly below pre-Covid-19 levels towards the end of the year, according to analysts at Antique Stock Broking.

“ITC’s cigarettes division performed strongly against its peers during the year, indicating market share gains. However, further restrictions in urban and rural markets could delay the recovery in cigarette volume.

A record increase in coronavirus infections in April and May led many Indian states to reintroduce limited lockdowns.

The ITC reported a 1% drop in its March quarter profit due to tax expenditures, while revenues jumped 24%.

The owner of several brands, including Sunfeast, Savlon and Aashirvaad, said his overall business saw a strong recovery in discretionary and out-of-home products.

Analysts at Prabhudas Lilladher, however, said the lockdowns were temporary hiccups and expect a smart pickup after the first quarter.

ITC shares, which have gained 3% so far this year at the last close, are down 2% to Rs 211 at 11:12 pm.

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