ITC's cigarette business is expected to face significant headwinds in Q4 FY26, with revenue likely to decline around 2% year-on-year according to Citi. As reported by The Economic Times, cigarette volumes are expected to remain largely flat during the quarter, impacted by higher taxation implemented in February 2026. Citi expects cigarette EBIT to decline around 5% year-on-year, with margins likely to contract by nearly 70 basis points to 56.9% due to rising leaf tobacco costs and inadequate price hikes during the quarter. Nuvama projects cigarette net revenue and EBIT to decline around 3% and 7% respectively, with the company expected to implement further staggered price hikes over coming months to fully offset tax impact.
Despite cigarette business challenges, ITC's FMCG segment is expected to remain a key earnings support with revenue growth of around 11% according to Citi. As reported by The Economic Times, EBIT may jump 37% with margin expansion of around 140 basis points. Nuvama also expects FMCG revenue growth of around 10% YoY, driven by improving margins and favourable base effects. The segment has increasingly become a larger contributor to ITC's growth profile as the company expands its packaged foods, personal care, dairy and household products portfolio. YES Securities expects non-cigarette FMCG business growth around 11% year-on-year during the quarter.
The agri business is expected to remain weak due to shipment disruptions linked to tensions in the Middle East and softer trading activity. According to The Economic Times, Nuvama sees agri revenue to decline around 10% YoY, while Citi expects a 12% growth in the segment. However, Nuvama noted that agri profits may still rise sharply because of margin recovery. The paper, paperboards and packaging business is also expected to witness modest growth amid continued import pressure, with brokerages estimating paper segment revenue growth in the low single digits.
At the consolidated level, Nuvama expects ITC's EBITDA to decline around 3.5% YoY, while EBITDA margin may contract around 76 basis points to nearly 34%. YES Securities is also pencilling in EBITDA margin compression of around 72 basis points to 34%. According to The Economic Times, gross margins are likely to remain broadly stable around 54-54.5% according to brokerage estimates. While operational performance is expected to remain subdued, analysts said investors will closely monitor management commentary on cigarette demand trends, pricing actions, FMCG margin trajectory and rural consumption recovery.
