TL;DR by CuriousCats.ai
- India's steep tax increase on cigarettes and tobacco products has started weighing on leading cigarette makers ITC, Godfrey Phillips India and VST Industries, which reported declines in net revenue, volumes and profitability in the April-June quarter.
- ITC's cigarette revenue grew 73.71% to ₹16,596.67 crore, which the company attributed to its staggered pricing approach amidst unprecedented increase in tax; gross revenue stripping out duty pass-through fell 31.45%, pointing to lower underlying sales volumes.
- Godfrey Phillips India's consolidated net profit fell 44.3% to ₹198.39 crore; revenue nearly doubled to ₹3,819.56 crore largely on account of ₹2,614 crore of excise duty, and excluding excise its net revenue fell 18.8% to ₹1,206 crore.
- VST Industries' revenue nearly doubled to ₹881.49 crore, but profit after tax fell 24.42% to ₹42.42 crore, net revenue declined 13.5% to ₹256 crore, and cigarette volumes fell 14%.
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Key Insight
“ITC's cigarette revenue grew 73.71% to ₹16,596.67 crore including duty pass-through; gross revenue stripping that out fell 31.45%, pointing to a hit on underlying volumes. Godfrey Phillips' net profit dropped 44.3% to ₹198.39 crore and VST Industries' profit after tax fell 24.42% as cigarette volumes declined 14%.”
CuriousCats studied:
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The Hindu
“The government's steep increase in taxes on cigarettes and tobacco products has started weighing on the country's leading cigarette makers, with ITC, Godfrey Phillips India, and VST Industries reporting declines in net revenue, volumes and profitability in the April-June quarter, the first full quarter after the revised tax regime came into effect.”
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