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ITC shares to be in focus on Tuesday as Q2 net profit drops 18.5% on higher cigarette taxes

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In short

Higher tax burdens and rising raw material costs led to a consolidated net profit drop to ₹4,229.33 crore, even as total revenue surged 43.85% to ₹30,578.4 crore. Non-cigarette units demonstrated resilience, with the paperboards and packaging business expanding its profit before interest and tax by 48%. FMCG operations also managed an EBITDA margin expansion of over 50 basis points on strong biscuit, snack, and homecare sales.

Key points

  • The company's total market capitalization has contracted by ₹1.72 lakh crore to settle at…: The company's total market capitalization has contracted by ₹1.72 lakh crore to settle at ₹3.33 lakh crore.
  • Shares have fallen 47% from their record high of ₹499 achieved in September 2024.: Shares have fallen 47% from their record high of ₹499 achieved in September 2024.
  • Diversified divisions performed well, with the food-tech business generating an annual re…: Diversified divisions performed well, with the food-tech business generating an annual recurring revenue exceeding ₹320 crore.

Sources checked by our analysis pipeline: 1

Diversified conglomerate ITC is likely to remain on investors’ radar on Tuesday, November 3, after the company reported another set of weak numbers for the September quarter, weighed down by higher input costs and increased taxes on cigarettes, which hit profitability.

The company reported a consolidated net profit of ₹4,229.33 crore after market hours on Monday, down 18.45% from ₹5,186.55 crore in the July-September quarter a year ago. However, revenue from operations rose 43.85% to ₹30,578.4 crore in the second quarter of FY27, compared with ₹21,255.86 crore in the year-ago period.

The cigarettes business continued to face pressure from unprecedented tax increases, which affected legal industry volumes and raised the risk of consumers shifting to illicit products.

Operating profit from its cigarettes business, which brings in the bulk of the group's earnings, fell more than 27% year on year to ₹3,813 crore. ITC said it has introduced new variants and strengthened its portfolio to protect its market position.

The FMCG business sustained strong double-digit revenue growth of 19%, led by biscuits, snacks, noodles, spices and homecare products. However, sharp input…

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