ITC reported a 27% drop in June quarter net profit to ₹3,579 crore, missing market estimates. While revenue grew 28% to ₹26,943 crore, the company highlighted rising costs due to geopolitical disruptions in West Asia and supply chain challenges. Investors are focusing on whether these inflationary pressures will persist in the coming quarters.
ITC Ltd released its financial results for the first quarter of fiscal year 2027, reporting a net profit of ₹3,579 crore. This marks a 27 percent decline compared to the same period last year and fell below the ₹3,990 crore estimate projected by analysts. Despite the pressure on the bottom line, the company’s revenue from operations saw a strong increase of 28 percent, reaching ₹26,943 crore compared to ₹21,694 crore in the previous year.
Segment Performance and Revenue Drivers
The company’s diversified business model continued to drive top-line growth. The core cigarette segment, a major contributor to ITC's revenue, recorded ₹15,383 crore. Meanwhile, the FMCG others segment, which includes staples and snacks, showed steady performance with revenue rising to ₹6,481 crore from ₹6,303 crore a year ago. Management highlighted that categories such as dairy, snacks, and frozen foods grew by more than 20 percent, while personal care products saw mid-teen growth. Despite these gains, the overall profit was impacted by higher costs and an unpredictable operating environment.
Geopolitical and Supply Chain Challenges
ITC pointed to external factors that affected its profitability during the quarter. The company stated that ongoing conflicts in West Asia led to significant volatility in crude oil prices and related products. These geopolitical issues caused trade and supply chain disruptions, which in turn increased costs. The company also noted that performance was hindered by domestic factors, including heat waves and issues related to LPG availability. Imported inflation remains a concern for the company as it moves into the next quarter.
Future Monitorables and Sector Risks
Looking ahead, ITC has flagged several risks that could impact future performance. The company noted that a potential monsoon deficit, with lower Kharif sowing compared to last year, could influence rural demand. Furthermore, the possibility of El Niño conditions might lead to weaker rainfall and continued heat waves, which could further intensify inflation. For investors, the key focus will be on whether the company can pass on these increased costs to consumers without impacting demand, or if profit margins will continue to face pressure from these external macroeconomic factors. ITC shares ended the trading session at ₹281, down 1.4 percent, with the results being released after the market closed.