ITC's Q2 FY26 Results Preview: Analysts Predict Steady Growth Amidst GST Impact and Cost Pressures

ITC Limited will announce its financial results for the second quarter of fiscal year 2026 (Q2 FY26) on October 30. Investor focus is particularly on how the company's performance will be affected by recent Goods and Services Tax (GST) changes and their influence on sales. Early trends from other Fast-Moving Consumer Goods (FMCG) companies suggest a mixed picture, with some consumption increases tempered by disruptions from the implementation of new tax rates.

Analysts are providing preview estimates. Axis Direct expects ITC to post 6% revenue growth, with cigarettes growing 7% (6% volume), FMCG by 5%, and agri by 10%. The paper segment is predicted to grow 4%, impacted by weak demand and competition from cheaper Chinese supplies. Kotak Institutional Equities forecasts the cigarette business to achieve 6-7% growth in volume and gross sales. However, they project cigarette Earnings Before Interest and Taxes (EBIT) margins to decline by approximately 200 basis points (bps) year-on-year (YoY) due to higher input costs, expecting benefits from moderating leaf tobacco prices later in the fiscal year. For the FMCG segment, Kotak estimates 4% YoY revenue growth, considering a potential 300-350 bps impact from channel destocking. FMCG EBIT margins are expected to see a modest quarter-on-quarter (QoQ) improvement due to easing raw material inflation. The agri business is projected for 10% YoY growth with stable EBIT margins, while the paperboards segment is likely to see subdued growth of around 5% amid challenging market conditions.

Impact: This news provides crucial forward-looking insights for investors tracking ITC and the broader Indian consumer goods and tobacco sectors. The company's performance significantly influences sector-specific stock movements and overall market sentiment. Rating: 8/10

Difficult Terms: * FMCG: Fast-Moving Consumer Goods, referring to everyday items like soap, biscuits, and toothpaste that are sold quickly. * Q2 FY26: The second quarter of the financial year 2026, typically covering July to September. * GST: Goods and Services Tax, an indirect tax on the supply of goods and services. * YoY: Year-on-Year, a comparison of performance against the same period in the previous year. * EBIT: Earnings Before Interest and Taxes, a measure of a company's operating profitability. * bps: Basis Points, where 100 bps equals 1%, used for small changes in percentages. * QoQ: Quarter-on-Quarter, a comparison of performance against the previous quarter. * RM: Raw Materials, the basic materials used in manufacturing products. * LFL: Like-for-like, a performance comparison that excludes the impact of new acquisitions or divestments. * EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization, another profit metric. * Destocking: The process where retailers reduce their inventory levels.