CA | SEBI RA (INH000012537)| Trend Follower-Buy Over Bought, Sell Over Sold | Wealth, Investing, Business & Tax | Ex-Deloitte
Delhi
Joined March 2015
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ITC Q2 looks like a paradox at first glance.
Gross revenue: up 46.6% to Rs 28,152 cr
PAT: down 20.1% to Rs 4,137 cr
How does revenue jump almost 50% while profit falls by a fifth? 🧵
The answer is the cigarette tax hike.
When excise goes up, ITC collects it from buyers and passes it to the government.
It lands in gross revenue, but none of it stays with ITC.
So the topline swells while the economics don't change.
That's why gross revenue is a misleading number for a cigarette company in a tax-hike quarter.
A big part of that 46.6% is tax flowing through ITC, not new business.
Higher prices squeeze volumes, and if ITC doesn't pass the full increase on, its margin per stick shrinks. Either way, profit takes the strain.
GRSE signed a Rs 32,000 cr contract with the Navy for five next-generation corvettes, to be built over about 9 years.
That's roughly Rs 3,400 cr of revenue a year.
The real question is margin and working capital on a fixed-price build that long.
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