ITC is expected to report a weak June quarter, with cigarette earnings likely to take a sharp hit from the transition to a new tax structure, even as its FMCG business is seen holding up well. Brokerages expect the company’s headline numbers to be dragged down by lower cigarette volumes, weaker cigarette profitability and pressure in the agri business. The key debate is how much of the tax impact has already been absorbed in Q1 and whether the cigarette business starts recovering from the September quarter.
Kotak expects ITC’s net sales, EBITDA and profit after tax to decline 17.5%, 27.5% and 24% year-on-year (YoY), respectively. Nuvama expects consolidated revenue to fall 10% YoY . YES Securities expects revenue to decline 14.3%, while Motilal Oswal expects cigarette revenue to fall 18%.
