Steady Stock On Bse Sensex ITC LTD

From being a mere cigarette company, the company is soon as a major force to reckon with in India’s agri business. Moreover with its rural initiative of e-Choupal, the company is surely redeeming all the damage its cigarettes cause! Its financial performance for the first quarter ended 30th June 2008 has taken a dip. YoY, though it sales managed to jump up 18%, QoQ, its net sales fell by less than one percent. The main driver of its sales was its agri business, which contributed 47% to the revenue. It markets agri commodities in the export and domestic markets; supplies agri raw materials to the Branded Packaged Foods division and sources leaf tobacco for the cigarettes business. The segment results for the quarter are after absorbing costs relating to the strategic e-Choupal. QoQ, the company managed to reduce its operating expenses by 4% and this resulted in its EBITDA go up by 3%. YOY, EBITDA rose by just 1% and this was on account of the comparative rise in operating expense, which rose sharply by 26%. PBT, on a YoY was down 1.3% while QoQ, it managed to show a rise of 3%. The PAT of the company on a QoQ rose marginally by 2% at Rs.748.67 crore while YoY it was down one percent. The unprecedented increase in excise duties on non-filter cigarettes in the Union Budget 2008, steep increases in commodity prices and store rentals, the launch costs of the additions to the new personal care portfolio and the continuing brand-building costs in the foods business exerted intense pressure on profitability during the quarter. The company’s cigarette business, which constitutes nearly half of ITC’s net revenue, was adversely hit following the unprecedented increase in the rates of excise duties on nonfilter cigarettes. The company had no option but to discontinue the manufacture and marketing of non-filter cigarettes in the plain and micro segments. ITC’s leaf tobacco arm, has taken up a major portfolio expansion to move into organic spices and medicinal and aromatic plants, with a special foray into the north eastern region. As a backward integration move, the company has already set up a new spices processing unit near Guntur (at a cost of Rs 15 crore). In mid-August 08;, the company announced the takeover of Pyxis Solution, a US based company through its wholly owned subsidiary, ITC Infotech. The main specialization of this company is to provide IT solutions to the Banking, Financial Services and Insurance (BFSI) segment in USA. Its clients included Merrill Lynch, Instinet, Prudential Insurance Company, SIAC, AIG, Banker's Trust, Deutsche Bank, Citibank, Chase Manhattan Bank. Unfortunately, today, this foray of ITC does not bode too well, especially in the backdrop of the Lehman bankruptcy and the ongoing turmoil. The effect of this subsidiary is sure to reflect in the profits of the company but because ITC is so huge, its impact might not be too damaging. With so many businesses of ITC, one wonders why ITC remains in cigarettes despite the atmosphere for making cigarettes being non-conducive. The company has explained that it has ventured into FMCG to dilute the effect of cigarettes but it would stick to the cigarette business since it was legal and provides resources required to enter new businesses in future. The stock has remained steady even in this troubled market at Rs.190 levels. Stay invested. Yes its Steady Stock On Bse Sensex I too hold this stock. Thanks