ITC's cigarette business loses spark

Atan analyst meet in December, ITC Ltd had hinted that volume consolidation in its main stay cigarette A business is on the anvil.

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So, investors tempered their expectations from the December quarter (Q3FY24) results. But a drop in volumes was not anticipated. For perspective, estimates suggested cigarette volumes would grow by 2% year-on-year in Q3. In contrast, volumes declined by 2%, according to analysts' calculations. Sure, a high base (volumes in Q3FY23 were up 15%) did play spoilsport, to some extent.

In response, shares of the cigarettesto-hotel conglomerate fell by nearly 3% on Tuesday. Notably, when seen on a normalized basis-four-year CAGRvolume is up by over 4%, roughly in line with the trend seen in the past few quarters. CAGR is compound annual growth rate. Here, the premium cigarette segment continued to put up a better show.

But a higher cost of inputs such as leaf tobacco meant a mere 2% year-on-year rise in Q3 cigarette Ebit.