Mumbai: Shares of ITC Ltd climbed nearly 4% on Monday after the diversified conglomerate reported stronger-than-expected quarterly earnings, supported by robust growth in its cigarette business. Global brokerage Jefferies highlighted the company’s resilient cigarette volumes and maintained a positive outlook, saying the segment continues to outperform despite higher taxes and regulatory challenges.

The upbeat earnings helped ITC emerge as one of the top gainers on the benchmark indices during early trade, with investors responding positively to the company’s improving profitability and healthy demand across key businesses.

Shares gain after quarterly results

ITC shares rose around 4% in Monday’s trading session after the company announced its financial results for the April-June quarter.

The stock rallied as investors welcomed the company’s earnings performance, which was largely driven by the continued strength of its cigarettes business alongside steady contributions from its other segments.

Cigarette revenue jumps over 8%

According to the company’s earnings, revenue from ITC’s cigarettes business increased by 8.1% year-on-year, outperforming market expectations.

The segment continues to remain ITC’s biggest profit contributor, benefiting from stable demand, premium product offerings and pricing actions despite an evolving regulatory environment.

Brokerage Jefferies noted that the company’s cigarette business has shown remarkable resilience even amid concerns about taxation and competitive pressures.

Jefferies highlights volume resilience

Following the quarterly results, Jefferies said ITC’s cigarette volumes remained resilient, an encouraging sign for investors tracking consumption trends.

The brokerage observed that volume growth continues to remain healthy despite periodic tax hikes and inflationary pressures, reflecting the company’s strong market position and pricing power.

Jefferies believes sustained volume performance could continue supporting earnings growth over the coming quarters.

Other businesses remain steady

Apart from cigarettes, ITC’s diversified portfolio—including FMCG, hotels, agri-business and paperboards—continued to deliver stable performance during the quarter.

While these businesses contributed to overall revenue growth, the cigarettes segment remained the primary driver of profitability, reinforcing its importance to the company’s earnings profile.

Analysts also noted that ITC’s diversified business model provides additional stability against fluctuations in any single segment.

Investor sentiment improves

The stronger-than-expected quarterly performance boosted investor confidence in the stock.

Market participants viewed the earnings as evidence that ITC continues to deliver consistent cash flows while balancing investments across its FMCG and hospitality businesses.

The positive reaction also reflects expectations that demand for the company’s premium cigarette portfolio will remain robust in the near term.

Analysts remain optimistic

Several analysts continue to maintain a constructive outlook on ITC, citing strong fundamentals, healthy dividend payouts and resilient earnings.

Brokerages believe the company is well-positioned to benefit from stable domestic consumption while continuing to expand its non-cigarette businesses over the long term.

Conclusion

ITC shares rallied nearly 4% after the company reported strong quarterly earnings led by an 8.1% rise in cigarette revenue. With Jefferies highlighting resilient cigarette volumes and analysts remaining optimistic about the company’s long-term prospects, investor sentiment towards the FMCG major has strengthened following its latest earnings announcement.