ITC Q1 FY26 Results Analysis: Growth, Headwinds, Brokerage Outlook, and Trends
ITC reported a 19.5% YoY revenue surge and a 3% YoY rise in consolidated net profit in Q1 FY26, propelled by robust performance in its cigarettes and agri businesses—even as margin pressures persist amid high input costs.
Q1 FY26: ITC at a Glance
- Consolidated net profit: ₹5,244 crore (+3% YoY)
- Revenue from operations: ₹23,129 crore (+19.5% YoY)
- EBITDA: ₹6,261 crore (+3% YoY); EBITDA margin: 27.1%
- Cigarettes: Volume growth ~6%; segment revenue rose to ₹9,554 crore
- Agribusiness: Revenue up to ₹9,724 crore (+37% YoY); strong rice, wheat exports
- FMCG (other): Revenue up 5.2%, driven by staples, biscuits, dairy, personal care, but margin impact from inflation
- Paperboards & Packaging: Margins remain pressured due to cheaper imports, subdued demand; revenue at ₹2,117 crore
Despite headwinds from inflation in key raw materials (edible oil, wheat, tobacco), ITC’s cost management, premium portfolio, and strong agri exports supported healthy growth.
How Each Business Segment Performed
| Segment | Q1 FY26 Revenue (₹ Cr) | YoY Growth | Q1 FY26 Profit/EBIT (₹ Cr) | Key Trends |
|---|---|---|---|---|
| Cigarettes | 9,554 | +8% | ~5,145 | Strong volumes, stable taxes, margin pressure from high-cost tobacco |
| FMCG (Others) | 5,777 | +5.2% | 398 | Broad-based growth, margin contraction (-16% in EBIT); high input costs |
| Agri Business | 9,724 | +39% | 434 | Exports led; strong global demand for wheat, rice, leaf tobacco |
| Paperboards, Packaging | 2,117 | +7% | 163 | Weak margins, competition from low-priced imports, slow demand |
| Hotels | 801 | +13% | 87 | Robust travel and event demand, demerger completed Q4 |
Margin compression is the key theme outside cigarettes and agri exports, reflecting macro cost pressures and competition.
Analyst Targets and Action
- Antique: Raise TP to ₹502 (Buy) — margin optimism but near-term EBITDA cuts
- Avendus: TP trimmed to ₹550 (Buy) — flagging cigarette market share, expects gradual FMCG recovery
- Motilal Oswal: TP to ₹500 (Buy) — betting on cigarette momentum, expects 5% CAGR
- Jefferies: TP ₹535 (Buy) — expects margin recovery as cost headwinds ease
- Goldman Sachs: TP ₹490 (Buy) — positive on core, watching palm oil cost trend
- HSBC: TP ₹510 (Buy), Nuvama: TP ₹532 (Buy)
- Consensus: ~38 of 40 analysts recommend ‘Buy’; price targets imply potential ~13–18% upside
Analyst sentiment remains bullish, grounded in resilient earnings, strong cigarette volumes, the government’s status quo on tobacco taxation, and hope for FMCG margin rebound as inflation moderates.
What’s Ahead for ITC?
- Margins expected to recover in H2 FY26 as input prices stabilize
- Firm expects rural demand revival aided by lower inflation, RBI support, tax relief, and government spend
- Cigarette business continues to underpin stability; growing premiumization across segments
- FMCG success hinges on managing commodity price risks and scaling brands beyond staples
- Paper and packaging to remain under margin pressure unless import headwinds ease
- Stock Outlook: Price at ₹416–425; has corrected 17.6% over 12 months, but consensus sees this as an attractive entry for steady compounding
Investor watch: Near-term volatility persists, but the business fundamentals and dividend consistency remain strong drivers for patient investors.
ITC Revenue & Net Profit (Q1 FY25 vs Q1 FY26)
ITC’s Q1 revenue saw a sharp jump while profit growth, though positive, was far more moderate—a demonstration of top line strength but ongoing pressure on margins.
Frequently Asked Questions
Strong volume growth in cigarette and agri exports led revenue gains, with additional support from resilient staples in FMCG and positive trends in hotels after demerger.
Elevated prices of tobacco, edible oils, wheat, and other commodities compressed margins in both FMCG and cigarette segments. The paper & packaging business also struggled due to cheaper Chinese imports.
Yes. Despite minor EPS and target cuts for FY26, nearly all major brokerages maintain Buy recommendations, citing attractive valuations, stable tax regime for cigarettes, and likely margin recovery in H2.
The stock is trading near ₹416–425 after a 17% correction over the past year; consensus targets suggest double-digit return potential for long-term holders.
Upside: Rural recovery, commodity price moderation, and further premiumization. Downside: Persistent margin pressure, cigarette tax hike, or continued competition in paper/FMCG.
Post Comment