ITC shares gained up to 2% on Monday following the company's Q1 FY27 results announcement, with the stock trading ₹289.10, up 2% as of latest reports. During the session, ITC touched an intraday high of ₹292.55, marking a 4.1% gain from the previous session's closing price of ₹281. Over 3 crore shares changed hands by mid-morning, though sell-side pressure remained elevated with nearly 61% of order flow on the sell side. The stock has shed over 30% in the past year and trades well below its 52-week high of ₹427, hit in September 2025, with year-to-date performance showing a 29% decline, underperforming the Nifty 50 by roughly 14 percentage points. The positive momentum follows a wave of analyst notes over the weekend, with Nomura and Jefferies both upgrading ITC to Buy, citing better-than-feared cigarette volume trends.
ITC's cigarette segment EBIT fell 35% year-on-year to ₹3,341 crore in Q1 FY27, reflecting the first full-quarter impact of the sharp tax increase that took effect on February 1. However, the cigarette business now contributes 76% of ITC's total segment EBIT, down from nearly 84% in FY26, indicating diversification efforts are paying off. Cigarette volumes declined only 5% year-on-year in Q1, significantly better than the 10% decline analysts had expected, with ITC's performance outperforming Godfrey Philips (52% decline) and VST Industries (41% decline). Following higher taxes, ITC staggered price hikes to limit the risk of smokers shifting to illicit products, with cigarette net revenue falling 25% year-on-year despite cumulative price hikes exceeding 20%. Jefferies India expects management to gain confidence to push through additional price hikes while limiting volume declines to the mid-single digits for the rest of FY27, with pressure on cigarette profitability expected to ease going forward.
The FMCG business delivered encouraging results with 12% revenue growth and a 20% increase in EBIT, demonstrating the company's diversification strategy. Dairy, snacks, noodles and frozen snacks grew more than 20%, while personal care posted mid-teen growth, showing strong performance across key categories. ITC's portfolio of digital-first and organic brands, including Yogabar, 24 Mantra, Prasuma, Meatigo and Mother Sparsh, is now running at an annual revenue rate of about ₹1,500 crore, highlighting the success of its premium brand strategy. The paperboards, paper and packaging business also performed well, with revenue rising 9% and EBIT jumping 38%, helped by stronger realizations, easing wood costs and a richer mix of value-added products. The atta business was hurt by heatwaves, shortage of liquified petroleum gas (LPG) and benign wheat prices, while the agri business remained the laggard with revenue falling 17% due to weaker leaf tobacco demand, delayed wheat trading and disruptions from the West Asia conflict.
Jefferies upgraded ITC to Buy with a price target of ₹350, implying upside potential of 21.07% from current levels, as reported by ET Now. Nomura also upgraded ITC to Buy with a target price of ₹340, representing 17.61% upside potential. Prabhudas Lilladher maintained its Hold rating with a target price of ₹291, while PL Capital upgraded from Hold to Reduce with a target of ₹291. Goldman Sachs maintained a Neutral rating at ₹290, Nuvama Hold at ₹310, JP Morgan Neutral at ₹310, Macquarie Neutral at ₹330, and HSBC Hold at ₹320. Kotak Institutional Equities maintained its Buy rating with a ₹360 target, while CLSA kept an outperform rating with a ₹388 target, as reported by The Hindu BusinessLine. Jefferies has upgraded the stock to Buy, saying the resilience in cigarette volumes points to improving earnings momentum, with the brokerage noting that although the demand environment remains resilient across rural and urban, the current geopolitical situation, commodity volatility, and monsoon, etc., remain key monitorables.
ITC shares have delivered mixed returns across different time frames, gaining 1% over the past week but slipping 0.43% in the last month. The longer-term trend remains weak, with the stock declining 20.65% year-to-date, 30.68% over the past year, and 36.70% over the last three years. Of the 37 analysts that have coverage on ITC, 18 of them have a 'Buy' rating, 15 have a 'Hold' recommendation, while five have a 'Sell' call on the stock. ITC warned that imported inflation, a weak monsoon, lower kharif sowing and West Asia tensions could pose near-term risks to its business. Prabhudas Lilladher estimates a decline of 13% in FY27 PAT and 15.2% growth in FY28, noting that although worst seems over, we expect recovery to be gradual and delayed. Management said it has implemented multiple measures in the cigarette business to strengthen its portfolio and protect market share, with the company taking over 30 interventions to protect the portfolio without pushing volumes to illicit trade.
