What happened
ITC reported a 20% year-on-year fall in standalone net profit to ₹4,137.1 crore for the September quarter, according to Economic Times. Standalone figures cover the company’s own operations and leave out subsidiaries.
The drop came even though revenue rose 45% in the quarter, the report said.
The paper attributed the squeeze to higher taxation on cigarettes. ITC had to absorb part of the resulting price increases instead of passing all of them on to buyers, which kept margins under pressure. Margin here means the share of revenue left as profit.
Outside cigarettes, the picture was stronger. Economic Times reported that ITC’s non-cigarette businesses recorded their highest revenue growth in 14 quarters.
What it means for you
If you hold ITC shares directly or through a mutual fund, the result shows that sharp revenue growth does not automatically lead to higher profit when taxes rise faster than the company can raise prices. It also shows how much the cigarette business shapes ITC’s earnings.
This article is not a recommendation to buy, sell or hold the stock. To see how a holding has grown over time, you can use the CAGR Calculator.
Background
ITC is a diversified Indian company with cigarettes alongside other consumer goods businesses. Economic Times noted that inflation and geopolitical tensions continue to affect the operating environment for the company.
Quarterly results are usually compared with the same quarter a year earlier, which is the year-on-year basis used here. Broader market context is available in our explainers on the Sensex and the Nifty 50.
