ITC Q1 Results: Profit Falls 15.6%, FMCG Business Posts Strong Growth

ITC Ltd reported a 15.6 per cent decline in consolidated net profit for the April-June quarter (Q1 FY27) to ₹4,508.79 crore, as a steep excise duty hike on cigarettes, soaring input costs and geopolitical disruptions weighed on profitability. Despite the earnings decline, the diversified conglomerate posted robust revenue growth, underlining the growing strength of its non-cigarette FMCG business and signalling a structural shift in India's consumer goods market.

The Kolkata-based company posted a profit of ₹5,343.41 crore in the corresponding quarter last year, while revenue from operations rose 27.64 per cent year-on-year to ₹29,523.3 crore. Revenue from product sales increased 27.82 per cent to ₹29,409.82 crore, and total income climbed 26.74 per cent to ₹30,179.01 crore. However, total expenses surged 48 per cent to ₹24,809.95 crore, driven by higher commodity prices, logistics costs and the increased tax burden on cigarettes.

ITC said the West Asia conflict disrupted global supply chains and triggered volatility in crude oil and crude-linked commodities, pushing up the prices of fuel, edible oils, packaging materials and other key inputs. The company mitigated part of the inflationary impact through strategic inventory management, commodity hedging and price-volume balancing.

The biggest challenge came from the sharp increase in cigarette excise duty. Instead of passing on the entire burden to consumers, ITC adopted a calibrated pricing strategy and rolled out more than 30 interventions across its cigarette portfolio, including product redesign, value-accretive offerings and strengthened branding to protect market share and curb migration to illicit trade. Analysts believe the strategy reflects a shift from margin expansion to market-share protection in an increasingly regulated tobacco industry.

The quarter's standout performer was ITC's FMCG-Others business. Revenue from the segment rose 15 per cent to ₹6,687 crore, while PBIT increased 21 per cent to ₹485 crore, with EBITDA margins expanding by 55 basis points, excluding Sresta Natural Bioproducts. Dairy, snacks, noodles, frozen snacks and personal care products recorded strong growth, while notebook sales rebounded on the back of premiumisation. The company's digital-first and organic portfolio also achieved an annual revenue run rate of nearly ₹1,500 crore.

The results reflect changing trends in India's FMCG sector, where premiumisation, health-focused products and digital commerce are driving growth. Consumers are increasingly opting for premium packaged foods, dairy products and personal care brands, reducing the industry's dependence on volume-led expansion. At the same time, the cigarette business continues to face mounting pressure from higher taxation, regulatory scrutiny and the threat of illicit trade.

Looking ahead, ITC cautioned that a monsoon deficit, lower kharif sowing, the prolonged West Asia conflict and emerging El Niño conditions could impact inflation, agricultural output and consumer demand. Nevertheless, the company said India's macroeconomic fundamentals remain resilient, supported by government policy measures, public investment and stable monetary conditions. It also highlighted the strong performance of ITC Infotech, Surya Nepal, Sproutlife Foods and ITC Hotels.

Shares of ITC Ltd ended 1.51 per cent lower at ₹280.95 on the BSE after the earnings announcement, as investors assessed the near-term impact of higher taxes on cigarettes against the company's growing FMCG momentum.