Diversified conglomerate ITC highlighted its focus on maximising cigarette potential, countering illicit trade and reinforcing its market standing in the segment moving forward.

The company saw its market standing strengthen by over 100 basis points over the last 18 months and did not witness any structural change in industry due to pandemic. Cigarette volumes have already come back to pre-Covid levels.

New variants

ITC has been focusing on new launches in the cigarettes division with a skew towards premiumisation backed by innovation.

According to Abneesh Roy, Executive Vice President, Edelweiss Research, cigarette is only 8 per cent of tobacco consumption.

“During times of tax increase, pricing growth is important. During stability, volume and mix growth is more important. ITC makes its filters and capsules — one of few companies that do that — which helps save cost,” Roy said in the analyst report post the meeting on Tuesday.

1612ITCcolcol
 

Focus on cost efficiency

Maximising cigarette potential and countering illicit trade would be done using levers such as innovation (mix improvement), creating an integrated ‘seed to smoke' value chain and improved availability, said a report by UBS, which maintained its buy rating post the analyst meet.

ITC, Puri said, maintained 9 per cent EBITDA through cost cuts, efficient marketing, shortening distance to market and calibrated price increase. In some market-leading categories it initiated price increase.

According to the ICICI Securities, ITC has amongst the highest addressable market in the Indian FMCG space. Categories where the company is present has lower penetration levels and are highly unbranded.

Related Topics