- Hit by a steep cigarette tax hike, ITC reported a 15.6 per cent slump in profit after tax to ₹4,509 crore in the first quarter, while consolidated net revenue declined 11 per cent to ₹18,955 crore.
- The cigarette division saw a 25 per cent net revenue drop and a 35 per cent fall in profit before tax to ₹3,341 crore in Q1FY27 from ₹5,145 crore, reflecting the staggered pricing approach.
- ITC chairman Sanjiv Puri told shareholders the business faced a challenge that could persist, but assured that the company was taking ‘appropriate steps’ to mitigate the impact.
- The maker of Gold Flake and Classic introduced 30 new interventions in the market and passed on some of the tax hike to consumers through price increases.
- The fast-moving consumer goods (FMCG) business returned 12 per cent revenue growth at ₹6,482 crore and 21 per cent profit before interest and taxes (PBIT) growth at ₹479 crore; dairy, snacks, noodles and frozen snacks grew 20 per cent; EBITDA margin expanded by 55 basis points despite sharp input cost increase.
- Elsewhere, the paper and paperboard business bucked the trend with a 9 per cent revenue rise and a 38 per cent PBIT jump, while the agri business fell 17 per cent in revenue amid trade disruption from the West Asia conflict; management also cautioned on El Niño conditions.
ITC's profit after tax dropped 15.6% to ₹4,509 crore in the first quarter, primarily due to a 70% tax hike on cigarettes, which constitute nearly 75% of its earnings. The company's net revenue also fell 11% to ₹18,955 crore.1
In the same quarter last year, ITC reported a profit of ₹5,343 crore and net revenue of ₹21,304 crore. The cigarette division faced a 25% drop in net revenue, with profit before tax declining 35% to ₹3,341 crore compared to ₹5,145 crore in Q1FY26.2
Chairman Sanjiv Puri acknowledged the ongoing challenges at the annual general meeting, stating that the company is implementing 'appropriate steps' to mitigate the impact. This includes introducing 30 new variants in the market and passing some of the tax burden onto consumers through price increases.34
While the cigarette segment struggled, ITC's FMCG business saw a 12% revenue growth, reaching ₹6,482 crore, with personal care and food segments reporting strong performance. The paper and paperboard division also performed well, with a 9% rise in revenue.5678910
However, external factors such as the ongoing conflict in West Asia and potential El Niño conditions may pose further risks to growth and inflation, according to management.
“Cigarette division profit before tax fell 35% to ₹3,341 crore, while the FMCG business cushioned the blow with 12% revenue growth to ₹6,482 crore. Management also flagged West Asia trade disruption and emerging El Niño conditions as risks to growth and inflation.”
