ITC Reports 81% Q1 Cigarette Revenue Growth As EBIT Falls 35%

ITC Ltd.'s cigarette business reported strong revenue growth during the first quarter of FY27, but the sharp increase in sales was insufficient to offset pressure on profitability. According to the company's stock exchange filing released on Friday, revenue from the cigarette segment surged 81% year-on-year to Rs 15,383 crore. However, earnings before interest and tax (EBIT) from the business declined 35% to Rs 3,341 crore, highlighting significant margin pressure despite the robust topline performance.

At the consolidated level, ITC posted a weaker financial performance for the June quarter. Net profit fell 27.1% year-on-year to Rs 3,579 crore, compared with Rs 4,911 crore in the corresponding period last year. Revenue from operations declined 14.5% to Rs 16,907 crore, falling short of analysts' expectations of Rs 18,630 crore. The results reflected a challenging operating environment despite strong performances in select business segments.

The company's operating profitability also came under pressure during the quarter. Earnings before interest, taxes, depreciation and amortisation (EBITDA) declined 27.9% to Rs 4,514 crore from Rs 6,261 crore a year earlier, missing analysts' estimates of Rs 5,356 crore. Consequently, the EBITDA margin contracted by 500 basis points to 26.7%, down from 31.7% in the year-ago quarter, indicating higher costs and weaker operating leverage.

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Among ITC's other businesses, the agri segment continued to face headwinds. Revenue from the division declined 17% year-on-year to Rs 8,082 crore, while EBIT slipped 18% to Rs 354 crore. In contrast, the company's fast-moving consumer goods (FMCG) business delivered strong growth, with revenue rising 53% year-on-year to Rs 21,866 crore, reflecting continued momentum across its non-cigarette consumer products portfolio.

The June quarter results underline the contrasting performance across ITC's diversified businesses. While the cigarette division recorded a substantial increase in revenue, shrinking margins weighed heavily on profitability. The decline in consolidated earnings and operating margins, coupled with weaker-than-expected revenue and EBITDA, suggests that cost pressures and changing business dynamics continued to impact the company's financial performance despite healthy growth in key segments.

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