D Street wary as ITC's high cigarette volume growth came at cost of profit

Analysts believe gradual price hikes will help sustain decent growth in cigarette volumes

Even as ITC posted a better-than-expected performance for the September quarter (Q2), led by strong cigarette volumes, its share price fell 2.3 per cent to close at Rs 280.65 on Friday. Analysts say that the Street seems unsure if ITC can sustain the strong volumes, which have partly come at the cost of profits.   

In Q2, while ITC's gross revenue grew a healthy 14.7 per cent year-on-year to Rs 110.9 billion versus analysts' estimates of Rs 107 billion, net profit was up 12 per cent to Rs 29.5 billion as against expectations of Rs 28 billion as per Bloomberg