ITC Q2 FY26 Performance: Cigarette Sales Up 6%, FMCG Growth at 8.5%, But Margins Face Pressure

Consumer Products

31st October 2025, 2:34 PM

ITC Q2 FY26 Performance: Cigarette Sales Up 6%, FMCG Growth at 8.5%, But Margins Face Pressure

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Stocks Mentioned :

ITC Limited

Short Description :

ITC reported a healthy performance in its core segments for the July-September quarter of FY26. Cigarette sales and volumes grew 6% year-on-year, while the FMCG segment saw an 8.5% increase in sales. However, cigarette earnings before interest and tax (EBIT) margins declined by 100 basis points due to higher leaf tobacco prices.

Detailed Coverage :

ITC Limited showcased robust growth in its key business areas during the second quarter of the fiscal year 2026. Consolidated gross cigarette sales registered a 6% year-on-year increase, with corresponding volume growth also at 6%. The cigarette business's earnings before interest and tax (EBIT) rose by 4.2% year-on-year. However, the EBIT margin for the segment contracted by 100 basis points year-on-year, settling at 58%. This margin decline is attributed to an increase in leaf tobacco prices, which impacted profitability.

The broader Fast Moving Consumer Goods (FMCG) segment also demonstrated strong momentum, with consolidated sales growing by 8.5% year-on-year. While specific product categories like notebooks continued to underperform, staple products experienced significant demand. Other categories like snacks and noodles also contributed to the segment's overall growth.

Impact: This news is moderately positive for ITC Limited, showcasing consistent growth in core segments. However, the margin pressure in cigarettes due to input costs might be a concern for investors. Overall, the diversified growth across FMCG provides a cushion. Rating: 6/10

Difficult Terms: EBIT: Earnings Before Interest and Taxes. This is a measure of a company's operating profit. Basis points (bp): A basis point is one-hundredth of a percentage point. 100 basis points is equal to 1%.