Diversified conglomerate ITC On Friday reported better-than-expected rise in net profit for the second quarter of current fiscal, but failed to meet analysts' expectations in terms of sales.

ITC announced that its net sales jumped 8.81 per cent to Rs 7,775.79 crore in the July to September quarter of current fiscal year. In the corresponding quarter of last fiscal, the company's net sales were recorded at Rs 7,146 crore.

During the quarter, the company's net cigarettes sales increased 10 per cent year-on-year to Rs 3,723.81 crore. The company held higher & discriminatory taxes along with illegal manufacturing responsible for slow growth in sales.

Announcing the quarterly results, ITC said, "Discriminatory and punitive taxation coupled with a growing incidence of smuggling and illegal manufacture are the biggest challenges confronted by the domestic cigarette industry."

However, the company's net profit jumped more-than-expected 21.46 per cent to Rs 2,230.53 crore, as against Rs 1,836.42 crore in the same quarter of last year.

Operating profit margin increased by 320bps year-on-year to 39.7 per cent, while earnings before interest, tax, depreciation & amortization (Ebitda) grew 18.5 per cent to Rs 3,090 crore.