ITC Ltd. Expected to Post Modest Revenue Growth in Q2 FY26 Amidst Segmental Challenges

ITC Limited is set to announce its second-quarter financial results for FY26 on Thursday, with analysts forecasting a low-to-mid single-digit year-on-year revenue growth. The key driver for this expected growth is the robust volume performance in the cigarette business, projected by Axis Securities to grow by 6% in volume and 7% in revenue year-on-year. The Agri business is also expected to contribute positively with a 10% growth. However, the non-cigarette FMCG segment is likely to face margin pressures, and the Paperboards segment is anticipated to remain weak due to competitive pricing from Chinese suppliers, with Axis Securities expecting only 4% growth in this segment.

Nuvama Institutional Equities estimates cigarette volumes to grow 5-6% year-on-year, with overall revenue and Ebitda growth around 1.7% and 0.6%, respectively. Elara Capital projects about 6% revenue growth and 3.7% Ebitda growth for the quarter. The FMCG sector, in general, experienced steady demand in Q2, but a Goods and Services Tax (GST) transition and an extended monsoon may have caused temporary slowdowns and impacted margins due to higher input costs and competitive intensity. Nuvama noted that GST transition issues could lead to a 2-3% adverse impact on volumes and sales due to delayed consumer purchases and trade reluctance.

Key monitorables for investors will include the demand outlook in rural versus urban markets, competitive dynamics, raw material trends, and the performance of the Agri business.

Impact This news is significant for ITC Limited as it provides insights into the company's operational performance and profitability for the quarter. Analyst expectations can influence investor sentiment and potentially affect the stock price. The expected performance, particularly the pressures on non-cigarette segments, will be closely watched. The impact on the stock is rated at 6/10.

Difficult Terms: Ebitda: Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating profitability before accounting for financing, tax, and non-cash expenses. FMCG: Fast-Moving Consumer Goods. These are products that are sold quickly and at a relatively low cost, such as packaged foods, beverages, and toiletries. GST: Goods and Services Tax. An indirect tax implemented in India that replaced multiple other taxes. YoY: Year-on-Year. A comparison of financial data from a particular period with the same period in the previous year.