ITC Ltd is expected to report an 11-13% decline in profit for the June quarter as higher cigarette taxes weigh on performance. While the cigarette segment faces pressure, analysts anticipate double-digit growth in the FMCG business. The final results are scheduled for release on July 31.
ITC Ltd is preparing to release its financial results for the first quarter of the 2027 fiscal year on July 31, with expectations pointing toward a challenging period. Analysts are projecting a double-digit decline in both revenue and profit for the consolidated entity, primarily due to struggles within its core cigarette division.
Cigarette Tax Impact and Volume Challenges
The cigarette business, which historically contributes a major share of the company's profit, is facing pressure from recent tax increases. These tax changes have made cigarettes costlier, leading to an anticipated drop in sales volume. Financial analysts at Motilal Oswal Financial Services have estimated that this segment could see an 18% fall in revenue and an 11% decline in volume, which may result in a 25% drop in Earnings Before Interest and Taxes (EBIT). The challenge for the company is that price hikes to cover taxes may not fully protect margins, as consumers might switch to cheaper or illicit alternatives.
FMCG Resilience and Segment Variations
While the core cigarette business faces headwinds, the Fast-Moving Consumer Goods (FMCG) segment is expected to continue its growth trend. Brokerages project revenue growth between 12% and 15% for this segment, supported by steady consumer demand. Improved operational efficiency and stable costs for raw materials are also expected to help widen profit margins in the FMCG business. Other parts of the company present a mixed picture. The agri-business is likely to see revenue decline due to international shipping issues and changes in trade policy, while the paperboards and packaging segment is projected to deliver moderate, single-digit revenue growth.
Market Expectations and Financial Estimates
Different brokerage firms have provided varying estimates for the upcoming results. Motilal Oswal expects a profit of approximately ₹4,620 crore, marking a 12% decrease, while Axis Direct forecasts a slightly larger 13% decline to ₹4,272 crore. These figures reflect a broader expectation across the investment community that the increased tax burden on the tobacco segment will overshadow growth in other business areas. Investors should track the management commentary during the post-result briefing, specifically regarding volume trends in the cigarette business and the long-term outlook for the agri-division, which is currently affected by external logistical and policy-related pressures.