BENGALURU (Reuters) – Shares of cigarettes-to-hotel conglomerate ITC Ltd fell practically 3% on Wednesday, after the corporate warned that lockdown restrictions might trigger disruptions in its provide chain within the close to future.
For fast-moving client items firms (FMCG) akin to ITC, promoting the whole lot from prompt meals, snacks, groceries to cigarettes, provide chain is a key a part of operations, permitting them to hawk their wares throughout the nation. A success to the provision chain might dent volumes and gross sales.
ITC’s warning on Tuesday got here as its money-making cigarette enterprise barely staged a restoration from final yr’s nationwide lockdown, with March quarter income rising 14% to 58.50 billion rupees ($799.10 million).
Cigarette volumes had been barely wanting pre-COVID-19 ranges in direction of the tip of the yr, based on analysts at Vintage Inventory Broking.
“ITC’s cigarette division posted a powerful outperformance versus friends throughout the yr indicating market share positive aspects. Nevertheless, contemporary restrictions in city and rural markets might delay cigarette quantity restoration going forward.”
A report surge in coronavirus infections in April and Might drove many Indian states to reintroduce restricted lockdowns.
ITC reported 1% drop in March quarter revenue as a result of tax bills, whereas income jumped 24%.
The proprietor of a number of manufacturers, together with Sunfeast, Savlon and Aashirvaad, mentioned its total enterprise noticed robust restoration in discretionary and out of residence merchandise.
Analysts at Prabhudas Lilladher, nonetheless, mentioned the lockdowns had been non permanent hiccups and anticipate a sensible pickup submit the primary quarter.
ITC shares, which have gained 3% to date this yr as of final shut, had been down 2% at 211 rupees as on 0542 GMT.
($1 = 73.2075 Indian rupees)
Reporting by Nallur Sethuraman in Bengaluru; Modifying by Rashmi Aich