ITC Profit Up 5% Amid Tax Hikes and Geopolitical Tensions

Diversified conglomerate ITC announced a 4.89% increase in its standalone net profit for the fourth quarter of fiscal year 2026, reaching ₹5,113.36 crore. The company achieved this growth despite facing significant pressures, such as an increased Goods and Services Tax (GST) rate and a sharp rise in excise duties that impacted its cigarette division. The ongoing conflict in West Asia also disrupted its agri-business operations.

Cigarette Business Adapts to Higher Taxes

ITC's total revenue from operations grew by 17.30% year-on-year to ₹21,694.67 crore. This growth was supported by strong performances in both its cigarette and non-cigarette Fast-Moving Consumer Goods (FMCG) sectors. Specifically, revenue from the cigarette business surged 31.74% to ₹11,066.02 crore during the quarter. However, operating profit for this segment saw a more modest increase of 7.23% to ₹5,488.16 crore. ITC noted that the tax burden on cigarettes intensified due to a GST hike from 28% of transaction value to 40% of retail sale price, along with excise duty increases. To maintain its market share and prevent a rise in illicit trade, the company is implementing strategic pricing adjustments and refining its product offerings.

Non-Cigarette FMCG Posts Robust Growth

ITC's non-cigarette FMCG business showed impressive growth, with revenue climbing 14.72% to ₹6,303.73 crore. Operating profit in this segment jumped 50.98% to ₹520.74 crore, with EBITDA margins improving by approximately 200 basis points to 11%. Even with rising costs for essential materials like edible oil and soap noodles, partly due to the West Asia conflict, the company effectively managed these challenges through market strategies and cost controls.

Agri-Business Faces Significant Headwinds

The agri-business segment experienced a considerable decline. Revenue fell 15.74% to ₹3,074.86 crore, and operating profit dropped 29.63% to ₹179.48 crore. This downturn was attributed to delayed sales caused by the West Asia conflict, alongside U.S. tariff actions and climate-related supply uncertainties. Additionally, government measures such as stock limits and export restrictions on key agricultural products limited business opportunities.

Paperboards and Packaging Deliver Modest Gains

ITC's paperboards, paper, and packaging division reported a 1.82% increase in revenue, reaching ₹2,227.52 crore, with operating profit rising 21.22% to ₹245.15 crore. This segment benefited from the introduction of a Minimum Import Price (MIP) for Virgin Multi-layer Paperboard, which helped reduce low-priced imports, and a decrease in wood prices.

ITC's board has proposed a final dividend of ₹8 per share, bringing the total dividend for fiscal year 2026 to ₹14.50 per share.