Kolkata: ITC Ltd reported a 20.1% year-on-year decline in consolidated net profit to Rs 4,137 crore for the second quarter of FY27, even as revenue from operations recorded modest growth. The company’s profitability came under pressure during the September quarter, largely reflecting a sharp decline in cigarette segment results.
The FMCG major had posted a consolidated net profit of Rs 5,176 crore in Q2 FY26. Despite the decline, its latest profit figure marginally exceeded the Bloomberg consensus estimate of Rs 4,129 crore.
Consolidated revenue from operations increased 1.8% year-on-year to Rs 18,401 crore, compared with Rs 18,081 crore in the corresponding quarter last year. The revenue figure was also higher than the Bloomberg-tracked analyst estimate of Rs 17,520 crore.
The contrasting performance in revenue and profit highlighted the pressure on ITC’s margins. The company’s margin stood at 28%, compared with 34.6% in the preceding quarter, according to the figures provided.
While the non-cigarette FMCG business recorded strong growth, the cigarette segment faced pressure following a significant increase in taxes. The company also reported growth in its agri-business and paperboards, paper and packaging segments.
ITC Q2 FY27 results: Revenue rises, profit declines
ITC’s September-quarter results reflected a modest improvement in consolidated revenue but a considerable fall in net profit.
The key financial figures for Q2 FY27, compared with the corresponding period of the previous financial year, are:
| Financial metric | Q2 FY27 | Q2 FY26 |
|---|---|---|
| Consolidated revenue | Rs 18,401 crore | Rs 18,081 crore |
| Consolidated net profit | Rs 4,137 crore | Rs 5,176 crore |
| Net profit growth | Down 20.1% | — |
| Revenue growth | Up 1.8% | — |
Revenue exceeded the Bloomberg consensus estimate of Rs 17,520 crore, indicating that the company performed better than analysts expected on the top line.
Net profit also narrowly beat the estimated Rs 4,129 crore. However, the year-on-year decline remained significant, with earnings falling by more than Rs 1,000 crore compared with Q2 FY26.
The reported margin of 28% was also lower than the 34.6% recorded in the preceding quarter. This contraction indicates that revenue growth did not translate into stronger overall profitability during the period.
The performance of individual business segments provides further insight into the factors affecting the company’s consolidated earnings.
Non-cigarette FMCG business records strong growth
ITC’s non-cigarette FMCG business emerged as a major growth driver during the September quarter.
Consolidated revenue from the FMCG Others segment increased 19% year-on-year. On a like-to-like basis, excluding the impact of acquisitions and other changes, revenue growth stood at 17.3%.
The business recorded its fourth consecutive quarter of double-digit revenue growth, while its revenue growth rate reached a 14-quarter high.
Segment profit before interest and tax (PBIT) rose 27.8% to Rs 558 crore. The PBIT margin also expanded by 75 basis points year-on-year, indicating an improvement in the profitability of the non-cigarette FMCG portfolio.
Several product categories recorded growth of more than 20%. These included biscuits, snacks, instant noodles, spices, salt, frozen snacks, homecare products and notebooks.
Dairy and personal wash products also delivered high-teens growth during the quarter.
The performance indicates that ITC’s non-cigarette FMCG portfolio continued to gain traction across multiple categories. The breadth of growth across food, personal care, homecare and stationery products also highlights the contribution of different businesses to the segment’s performance.
Digital-first brands and online channels expand
ITC’s digital-first and organic portfolio continued to record strong growth during Q2 FY27.
The portfolio grew by more than 70% year-on-year, with its annual revenue run rate crossing Rs 1,800 crore. This reflects the company’s efforts to expand its presence in newer product categories and reach consumers through digital-first brands.
The company also reported a strong recovery in General Trade, which remains an important distribution channel for its FMCG products.
At the same time, e-commerce, quick commerce and modern trade continued to expand. These channels have become increasingly important for consumer goods companies seeking to reach urban customers and respond to changing shopping habits.
The growth across these distribution platforms provides ITC with additional routes to market its products. However, the company will need to sustain this momentum while maintaining profitability as competition across consumer goods categories remains significant.
The strong performance of the non-cigarette FMCG business stands in contrast to the pressure reported in the cigarette segment, which remains a major contributor to ITC’s overall business.
Cigarette business faces pressure after tax increase
ITC’s cigarette business was one of the main pressure points in the September quarter.
The segment’s results declined 27.2% year-on-year to Rs 3,813 crore, compared with Rs 5,241 crore in Q2 FY26.
The company attributed the pressure to an unprecedented increase in taxes, which affected demand across the legal cigarette industry.
Higher taxes can influence the prices paid by consumers and affect demand for legally sold products. ITC also highlighted the risk of consumers shifting towards illicit cigarette sales as the legal market faces pricing pressure.
Despite the decline in segment results, the company reported an improvement in sequential performance during the quarter.
ITC has introduced new cigarette variants and strengthened its existing brands in an effort to retain its consumer base. It is also focusing on limiting the shift towards smuggled and illicit products.
The company reported a sharp increase in seizures of smuggled cigarette consignments across India. It continues to rely on product innovation, brand positioning and portfolio changes to address the challenges facing the cigarette business.
The segment’s performance will remain important for the company’s overall financial results, given its contribution to ITC’s earnings.
Agri-business and paper segment report revenue growth
ITC’s other major businesses also recorded an increase in segment revenue during Q2 FY27.
The agri-business generated revenue of Rs 4,451.69 crore, compared with Rs 3,976.24 crore in the corresponding quarter last year.
Revenue from paperboards, paper and packaging increased to Rs 3,015.85 crore from Rs 2,219.92 crore in Q2 FY26.
These businesses add to ITC’s diversified operating portfolio beyond cigarettes and consumer goods. Their performance is relevant to the company’s overall revenue mix, although the figures provided do not detail the specific factors behind the growth in each segment.
The total segment results stood at Rs 5,156.55 crore, compared with Rs 6,320.72 crore in the year-ago quarter.
The decline in total segment results reflects the pressure on profitability despite revenue growth across several business categories. The cigarette segment’s lower results were particularly significant in the overall performance.
ITC share price on November 2
ITC shares closed at Rs 266.40 on Monday, November 2, gaining Rs 0.80 or 0.30% from the previous close of Rs 265.60.
The stock opened at Rs 266 during the session and touched an intraday high of Rs 269.30. It also recorded an intraday low of Rs 264.
The share price movement came as investors assessed the company’s September-quarter performance. While revenue exceeded analyst estimates and non-cigarette FMCG growth remained strong, the decline in consolidated profit and cigarette segment results highlighted the challenges facing the business.
The market’s response to the results will depend on how investors assess the sustainability of FMCG growth, the recovery in the cigarette segment and the company’s ability to protect margins.
What ITC’s Q2 results mean for investors
ITC’s Q2 FY27 performance presented a mixed picture. Consolidated revenue increased 1.8% year-on-year and exceeded the Bloomberg estimate, while net profit declined 20.1% to Rs 4,137 crore.
The strongest operational performance came from the non-cigarette FMCG business, which recorded 19% revenue growth and a 27.8% increase in segment PBIT. Its 14-quarter-high revenue growth and expanding margins were positive indicators for the company’s diversified consumer goods portfolio.
However, the cigarette business remained under pressure, with segment results falling 27.2% following the tax increase. The decline in total segment results also showed how weakness in a major business can affect the company’s overall profitability.
Investors will be watching whether the non-cigarette FMCG business can maintain its growth momentum and whether the cigarette segment can recover from the impact of higher taxes.
Overall, ITC’s September-quarter results showed that revenue growth alone was not enough to prevent a decline in consolidated profit. The performance of its FMCG portfolio offered some strength, but the cigarette business and margin contraction remained key concerns.