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A man talks on his mobile phone as he walks past an ITC office building in Kolkata September 4, 2012.Reuters file

ITC Limited, which has interests in cigarettes, hotels, agriculture and paperboards, reported 3 percent volume growth in cigarette sales for the June 2016 quarter, the highest since Q4, 2013.The company derived about 63 percent of its total operating revenues from selling cigarettes in the first quarter of the current financial year.

The company's revenues from cigarettes stood at Rs. 8,230 crore out of total operating revenues of Rs. 13,156 crore. Its total revenues (including other income) stood at Rs. 13,253.06 crore. Revenues from cigarette sales constituted 6.4 percent growth over Rs. 7,733 crore on a year-on-year basis.

The volume growth was the best in three years, according to analysts Vishal Punmiya and Krishnan Sambamoorthy at brokerage Motilal Oswal Securities Limited (MOSL). 

"We reckon cigarette volumes were up 3% YoY (best numbers since 4QFY13 and better than our expectation of 1% increase) aided by higher growth in the sub 65mm segment (now well over 20% share in overall volumes in our view), benign base (1QFY16 had reported 17% volume decline) and lower price increases off late," they wrote.

Cigarette sales in India have been subject to periodic rise in excise duty and of late, controversies over the size of pictorial warnings.

"Cigarette volumes had been impacted over the past 3 years due to consecutive excise duty/VAT increases and regulatory headwinds but the worst impact in terms of volume now seems to be over," Vishal Punmiya and Krishnan Sambamoorthy added.

ITC reported a net profit of Rs. 2,384.67 crore for the June 2016 quarter, an increase of 10 percent over Rs. 2,166.09 crore in the corresponding quarter last year. Total revenues of Rs. 13,253 crore represented a growth of 8.3 percent over Rs. 12,232 crore on a YoY basis. 

Other segments of ITC include agriculture, paper products, hotels and retail. 

"Operating conditions in the hotels and paperboards, paper and packaging segment also remained subdued," the company said in a statement.

At around 11.52 a.m. on Friday, ITC shares were trading at Rs. 249.90 apiece, down 0.30 percent from their previous close, on the Bombay Stock Exchange.