ITC Limited's board approved unaudited standalone and consolidated financial results for Q2 FY27 on November 2, 2026, marking the official announcement of the company's September quarter performance. Consolidated net profit fell 18.5% year-on-year to ₹4,229 crore from ₹5,187 crore in the same period last year, while net revenue rose 5% to ₹20,454 crore from ₹19,455 crore a year earlier. The revenue figure reflects the consolidation of Century Pulp and Paper from August 1, 2026, which contributed significantly to the quarter's performance. Standalone gross revenue from sale of products and services was ₹28,152.21 crore, compared with ₹19,207.82 crore in Q2 FY26, demonstrating the impact of the strategic acquisition. Standalone profit before tax was ₹5,481.75 crore, against ₹6,847.35 crore in the corresponding quarter last year, with exceptional items of ₹25.66 crore representing acquisition-related expenses for Century Pulp and Paper.
The cigarette business remained the biggest drag on overall earnings during the quarter, with segment profit declining 27.2% to ₹3,813 crore from ₹5,241 crore in the corresponding period last year, while net cigarette revenue fell 21%. Cigarette volumes declined 7-8% during the quarter, though both metrics improved sequentially with cigarette EBIT rising 14% quarter-on-quarter. Jefferies estimates cigarette volumes declined by around 8% year-on-year, with cigarette net revenue falling 21% and segment EBIT declining 27%. Jefferies expects cigarette revenue to decline 7% in FY27, with volumes falling 6%, followed by recovery of 13% in FY28 and another 10% increase in FY29. Nuvama believes the cigarette business is nearing the bottom and expects EBIT to improve in the second half of FY27 as ITC adjusts to the higher tax burden. Emkay noted that ITC did not pass on the entire tax increase to consumers to prevent smokers from shifting towards smuggled cigarettes, with around 80% of the required price increase already implemented, with the remaining increase likely by February-March 2027.
The strength in ITC's non-cigarette businesses provided significant support to overall earnings, with ITC's non-cigarette FMCG business delivering its strongest revenue growth in 14 quarters. The FMCG business posted revenue growth of 16% and profit growth of 28%, marking the fourth consecutive quarter of double-digit growth for the business. Jefferies reported 17% growth in FMCG revenue, with several categories recording growth of more than 20%, while dairy and personal wash also posted growth in the high teens. The digital-first and organic portfolio continued to perform strongly, growing more than 70% YoY and crossing an annual recurring revenue (ARR) of ₹1,800 crore. Nuvama highlighted the FMCG business, which recorded 16% growth, its fastest pace in 14 quarters, with the brokerage noting that calibrated price hikes are expected to support a gradual recovery.
ITC shares gained 2% to ₹271 on the NSE on Tuesday, despite reporting an 18.5% decline in consolidated net profit for the September quarter. As per The Economic Times, the stock gained 2% despite an 18.5% year-on-year decline in Q2 net profit, as higher taxes and falling cigarette earnings weighed on profitability. The company's Q2 performance was slightly ahead of estimates, with revenue coming in around 2% above estimates, according to Emkay. Consolidated net revenues rose 3.9% year-on-year to ₹20,269 crore, with both revenues and profit marginally exceeding the Bloomberg consensus estimates of ₹20,111 crore and ₹4,136 crore, respectively. On a sequential basis, net revenues rose 6% from ₹19,114 crore in Q1FY27, while net profit declined 5.1% from the preceding quarter. PL Capital upgraded the stock's rating from hold to 'accumulate' after Q2FY27 results, noting that the worst seems over and downside seems limited given a 50% decline from the peak and 5% dividend yield.
Despite the mixed quarterly performance, 38 analysts maintain coverage on ITC, with 58% or 22 analysts continuing to maintain a 'buy' recommendation while 15 others have a 'hold' rating. Jefferies maintains its 'buy' rating with a price target of ₹350, expecting sequential improvement in cigarette trends despite trimming FY27-29 earnings estimates by 2-3%. Nuvama upgraded the stock to 'Buy' from 'Hold' on the back of improving business momentum and attractive valuations, noting that the stock correction has made valuations attractive with ITC trading at around 17 times its FY28 earnings with a dividend yield of 5-6%. Emkay retained its 'Add' rating but cut its target price by 3% to ₹300, while DAM Capital maintained its 'Buy' rating with a target price of ₹355. CLSA stands out with an 'outperform' rating and price target of ₹390, among the highest on the street for the stock. Motilal Oswal has maintained a 'Neutral' rating with a target price of ₹285, reflecting concerns around cigarette profitability, taxation and pricing flexibility.
