ITC Ltd reported a 22.16% year-on-year decline in consolidated profit after tax before exceptional income to ₹4,082.32 crore for Q1 FY27, compared to the previous year, as per Business Standard. The company's consolidated revenue from operations declined 11.1% to ₹19,000.89 crore from ₹21,372.93 crore in Q1 FY26, while gross revenue increased 27.8% YoY to ₹29,409.82 crore. The results fell short of market expectations, as analysts were expecting a 10-11% decline in both net sales and net profit. The conglomerate had implemented over 30 interventions towards re-architecting and fortifying its cigarette product portfolio to combat the increase in taxes, with the company noting that several of these interventions are progressing well and have achieved meaningful scale.
The cigarette business faced significant pressure from substantial tax increases, with ITC undertaking over 30 interventions towards re-architecting and fortifying its cigarette product portfolio to combat the increase in taxes. According to The Economic Times, cigarette sales volumes declined 6-7% from a year earlier, with the company adopting a calibrated approach to price hikes to protect demand, but this weighed on profitability in its largest business. The cigarettes segment's profit before interest and taxes (PBIT) plunged 35% from a year earlier to ₹3,341 crore, while revenue jumped to ₹15,383 crore from ₹8,520 crore, though the company noted these figures were not comparable due to GST and GST compensation cess exclusion from gross revenue calculation. The company implemented staggered and agile pricing actions to mitigate the risk of significant migration of volumes to illicit trade while protecting consumer franchise, with the company noting it has shifted from fully passing on higher taxes through prices to calibrated price increases to protect its legal franchise. Motilal Oswal reports that ITC reported a 22% YoY decline in consolidated net cigarette revenue (₹10,410 crore) vs. expectation of 18% decline, with consolidated Ebit declining 32% YoY to ₹3,770 crore (estimate ₹4,110 crore) and standalone Ebit falling 35% YoY.
The FMCG business demonstrated resilience with revenue growth of 12% during the quarter, with segment revenue rising to ₹6,482 crore and profit before interest and tax increasing 21% to ₹478 crore, as per The Economic Times. According to The Economic Times, categories including dairy, snacks, noodles and frozen snacks expanded more than 20%, while personal care products delivered mid-teens growth. The FMCG-Others segment posted revenue of ₹6,482 crore, up from ₹6,303 crore in the corresponding quarter last year, with growth driven by over 20% growth in dairy, snacks, noodles and frozen snacks, along with mid-teen growth in personal care products. The beverages category registered strong growth during the quarter, aided by the harsh summer season, with the company launching 'B Natural Coconut Cola' and introducing new smoothie flavours under the Sunfeast brand. The digital-first and organic portfolio, including Yoga Bar, 24 Mantra, Prasuma, Meatigo and Mother Sparsh, continued its growth trajectory, reaching an annual run rate (ARR) of about ₹1,500 crore, while the fresh foods business reported gross merchandise value growth of over 90% year-on-year and an ARR of ₹300 crore. The notebooks business also rebounded during the quarter, though the atta business was impacted by transient factors including heatwave, LPG shortages and benign wheat prices.
The company acknowledged that Q1 FY27 was marked by heightened uncertainty in the operating environment due to the ongoing conflict in West Asia, that triggered a sharp increase and volatility in the price of crude oil & crude-linked products along with significant trade & supply chain disruptions. According to The Economic Times, the West Asia crisis hurt the agri-business exports during the period, with revenue in the agri-business segment declining more than 17% to ₹8,082 crore as exports were hit by trade disruptions arising from the West Asia conflict. The Indian Leaf Tobacco Business remained under pressure due to weak domestic demand, subdued global offtake and delayed customer call-offs amid disruptions caused by the West Asia conflict. The paperboards and paper segment reported 9% revenue growth, while the segment's PBIT rose 38%, providing some offset to the overall impact. The broader macroeconomic backdrop also remained challenging, with retail inflation accelerating to 4.38% in June from 3.93% in May, breaching the Reserve Bank of India's 4% medium-term target for the first time since January 2025. On the cost front, total expenditure declined 5.1% YoY to ₹13,933.51 crore, while raw material consumption increased 11.9% YoY to ₹6,982.15 crore, employee benefit expenses rose 12.0% YoY to ₹1,877.01 crore, finance costs surged 141.5% YoY to ₹39.78 crore, and depreciation increased 1.1% YoY to ₹427.73 crore.
Following the results announcement, ITC shares closed 1.42% lower at ₹281 on Friday, 31 July 2026, as reported by Business Standard. The stock had fallen as much as 1.5% to ₹281.10 during the quarter, with the company losing 10% in 3 months, 12% in 6 months and 31% in the last 1 year. Motilal Oswal has retained its 'Neutral' rating and ₹300 target price on the stock, acknowledging healthy growth in FMCG and paper businesses while remaining cautious on the cigarette segment. The brokerage believes earnings pressure on cigarettes would offset the near-term catalysts- recovery in FMCG and Paper, and comfort on valuation. During the quarterly result announcement, investors will closely monitor revenue and volume growth across different business segments like FMCG, cigarettes and agribusiness, along with demand outlook in urban and rural regions. The company also flagged concerns over the monsoon, noting that India is witnessing a significant rainfall deficit and lower kharif sowing compared with the same period last year. ITC warned that spatial and temporal variations in rainfall, a prolonged conflict in West Asia and the emergence of El Niño conditions could adversely impact economic growth, inflation and the current account going forward.
