ITC could find it tough to maintain volume trajectory

ET Intelligence Group: ITCNSE 1.11 %, India’s largest cigarette company, did well to deliver 8 per cent volume growth in its core business, in line with the sales and profit growth expectations. This growth has come on a low base (negative 3 per cent in the previous March quarter) and no rise in taxes for almost two years. But the same may not repeat in the coming quarters as the base would be higher now.

After a drop in volume growth in each quarter of FY18, ITC witnessed 2 per cent, 6 ..

It would be difficult for ITC to beat, or sustain, such high growth in FY20. The low base effect of the previous June quarter (2 per cent volume growth) and last month’s price increase could mean a decent first quarter for the company.

In April, ITC had raised prices of three of its brands, implying a near 2.2 per cent overall rise for its portfolio. Analysts remain divided over whether this will impact the volume growth, but the performance in the following quarters will decide the stock price movement for FY19 and it will be watched closely.

For ITC investors, cigarette business remains the most critical. It accounts for nearly 85 per cent of the profits and is the only business that can move the earnings growth nee ..

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