ITC Q1 Results: Net profit falls 27% YoY, FMCG revenue rises 12%
ITC’s Q1FY27 results reflect a challenging operating environment with standalone PAT down 27% YoY to ₹3,579 crore. The Cigarettes segment faced a 25% revenue drop due to tax hikes, while Agri business was impacted by West Asia trade disruptions. Conversely, the FMCG segment grew 12% YoY, led by Dairy and Snacks, and the Paper segment saw a 38% PBIT increase. Fresh Food business GMV surged 90% YoY.
*this image is generated using AI for illustrative purposes only.
ITC Limited reported a 27% year-on-year decline in standalone net profit after tax (PAT) to ₹3,579 crore for the quarter ended June 30, 2026, as higher excise duties on cigarettes and geopolitical disruptions weighed on overall earnings. Standalone EBITDA fell 28% YoY to ₹4,514 crore, while gross revenue rose 28% YoY to ₹26,794 crore. The Board of Directors approved the results on July 31, 2026.
The decline in profitability was largely driven by the Cigarettes segment, where net revenue dropped 25% YoY following an unprecedented increase in taxes. Management implemented staggered pricing actions and portfolio re-architecting to mitigate volume migration to illicit trade. Consolidated PAT (before exceptional items) fell 23% YoY to ₹4,103 crore, though this figure includes a one-time gain from the acquisition of control over Sproutlife Foods Private Limited.
Segment Performance
The FMCG segment (excluding Cigarettes) demonstrated resilience with revenue growing 12% YoY, or 16% excluding staples. Key drivers included Dairy, Snacks, Noodles, and Frozen Snacks, which posted growth exceeding 20%. Personal Care products contributed mid-teens growth. The Digital-first and Organic portfolio, comprising brands like Yogabar and 24 Mantra, reached an annual revenue run rate (ARR) of approximately ₹1,500 crore.
| Segment | Metric | Q1 FY27 Value | YoY Change |
|---|---|---|---|
| FMCG (ex-Cigs) | Revenue Growth | — | +12% |
| Paper | PBIT Growth | — | +38% |
| Agri Business | Underlying Rev. Growth | — | +9% |
| Fresh Food | GMV Growth | — | +90% |
The Paperboards, Paper & Packaging segment sustained its recovery momentum, with segment revenue up 9% YoY and PBIT surging 38% YoY. This improvement was supported by broad-based gains in net realisations and moderating wood costs. The Agri Business segment reported underlying revenue growth of 9% YoY, adjusting for timing differences in wheat sales and trade disruptions linked to the West Asia conflict.
What the Numbers Show
A key divergence in ITC’s performance is the contrast between top-line gross revenue growth and bottom-line profit contraction. While gross revenue expanded by 28% YoY, net revenue fell 14% YoY (excluding Agri, it fell 6%). This suggests that while volume or base pricing increased, significant cost pressures—such as sharp rises in fuel, edible oil, and packaging inputs due to the West Asia conflict—eroded margins. The company partially cushioned these impacts through strategic inventory covers and commodity hedges, but the tax headwind in cigarettes remains the primary drag on consolidated profitability.
Historical Stock Returns for ITC
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -1.42% | -0.11% | -2.07% | -12.77% | -31.06% | +44.94% |
How might ITC's staggered pricing strategy in the Cigarettes segment impact long-term brand loyalty and market share against illicit trade competitors?
Will the 38% surge in Paperboards PBIT be sustainable as global wood costs stabilize, or is this a temporary recovery driven by lagging input price adjustments?
Can the Digital-first and Organic portfolio maintain its ₹1,500 crore annual run rate growth trajectory amidst rising consumer cost-of-living pressures?
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