ITC Faces Tough Quarter With Profit Drop Predicted From Higher Tobacco Taxes

Profit Pressures

ITC is heading into a weak second quarter as brokerages forecast a drop of up to 29 percent in cigarette operating profit, driven by tax hikes on cigarettes. Alongside the profit fall, market watchers expect an 8 percent decline in cigarette volumes.

Business Performance

Nuvama Equities expects consolidated revenue to fall 3 percent year-on-year, and EBITDA to decline 20 percent. This revenue drop is further hurt by weakness in the cigarette business and subdued agricultural operations. However, growth in the fast-moving consumer goods and paper businesses could provide some support against these financial pressures.

Context

Tax changes on tobacco products often impact corporate earnings in the consumer goods sector, leading companies to rely on other segments like packaged goods and paperboards to balance their overall financial results.