ITC Q2 Results: Profit Falls 18.7% to ₹4,168 Crore on Cigarette Tax

The ITC Q2 results released on Monday showed consolidated net profit attributable to owners falling 18.7% to ₹4,168.40 crore for July–September 2026, as a higher cigarette tax weighed on its largest business.

Net revenue rose 3.9% year on year to ₹20,269 crore and was up 6% from ₹19,114 crore in the April–June quarter, according to Business Standard. Both profit and revenue came in marginally ahead of Bloomberg consensus estimates of ₹4,136 crore and ₹20,111 crore respectively.

Q2 FY27 headline numbers differ across reports because of how profit and revenue are counted. PTI put total consolidated net profit at ₹4,229.33 crore, down 18.45% from ₹5,186.55 crore a year earlier, while gross revenue from operations, which includes excise duty, rose 43.85% to ₹30,578.4 crore.

Cigarette tax hits ITC net profit

Pre-tax profit from cigarettes fell 26% year on year to ₹4,044.49 crore, though it improved 7.3% from ₹3,769.11 crore in the previous quarter. ITC said legal industry volumes “remained under pressure due to unprecedented increase in tax”.

The pressure stems from a tax overhaul that took effect on 1 February 2026, which raised GST on cigarettes and increased excise duty after the compensation cess was phased out. ITC said it followed a calibrated approach to limit a shift to illicit trade while protecting its consumer franchise.

The company also faced cost pressures linked to the conflict in West Asia, which has kept crude and input prices elevated. Analysts at PL Capital estimated that ITC’s cigarette volumes fell about 8% year on year in the quarter.

FMCG, agri and paper businesses gain ground

The non-cigarette FMCG business posted revenue of ₹7,218.36 crore, up 19.1%, while its pre-tax profit rose 31.4% to ₹576.69 crore. ITC described the segment’s growth as a 14-quarter high, led by biscuits, snacks, noodles, spices, salt, frozen snacks, homecare and notebooks, each of which grew more than 20%.

Agri business revenue rose 12.7% to ₹4,550.60 crore and pre-tax profit increased 14.3% to ₹518.41 crore, despite disruption from the West Asia conflict and delayed customer call-offs. The company said it is expanding the business into new geographies.

Paper was the standout, with revenue up 35.9% to ₹3,017.45 crore and pre-tax profit up 50.7% to ₹273.32 crore on improved demand and pricing actions. ITC completed its acquisition of the Century Pulp & Paper undertaking on 1 August 2026.

Why ITC Q2 results matter for investors

ITC is one of the heavyweight stocks in the Sensex and Nifty, so its earnings trajectory matters to index investors as well as to the consumer sector. The quarter shows how far its diversified businesses can cushion a tax shock in the core cigarette franchise, which still contributes most of its segment profit.

Shares of ITC traded at ₹266 on the NSE at 9:21 am on Tuesday, up 0.24%, after touching an intraday high of ₹270, according to Business Standard. The stock has also seen heavy institutional activity in recent weeks, including GQG’s sale of a 2.91% stake in ITC through block deals.

Brokerages stayed broadly constructive after the ITC Q2 results. Jefferies retained its buy rating while trimming earnings-per-share estimates by 2–3%, and PL Capital upgraded the stock to accumulate from hold, saying it believes “the worst seems over”.

The key variable from here is how quickly cigarette volumes stabilise after the tax reset. ITC, which publishes its results filings on its official investor website, flagged risks from deficient and uneven monsoons, low reservoir levels, El Niño, geopolitical tensions, inflation and consumer sentiment, according to Business Standard. These could shape demand in the second half of the fiscal year.

For now, the results underline a shift that is still in progress at the conglomerate. Its non-tobacco businesses are growing at double-digit rates, but they are not yet large enough to offset a sharp fall in cigarette earnings. Readers can follow more quarterly earnings coverage in our latest business news section.

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Region: India

Meta title: ITC Q2 Results: Profit Falls 18.7% as Cigarette Tax Bites (57 characters)

Meta description: ITC Q2 results: net profit fell 18.7% to ₹4,168.40 crore as cigarette tax hit volumes, while FMCG, agri and paper businesses grew at double digits. (147 characters)

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Note: Fact & grammar check done — 3 corrections (risk-factor list re-attributed to Business Standard; removed unverified “second straight quarter” claim; lede tightened to under 35 words). Phrasly unavailable (human verification pending) — text not humanised. Conflict flagged: Business Standard body gives profit attributable to owners ₹4,168.40 crore (−18.7%); PTI gives total consolidated profit ₹4,229.33 crore (−18.45%) — both explained in copy. Gross revenue ₹30,578.4 crore (+43.85%) is PTI, includes excise. No ITC press release/BSE filing was read directly; external link points to ITC’s investor website homepage — editor may swap in the exact BSE filing URL. PL Capital volume estimate (−8%) and Jefferies/PL Capital views come from Business Standard market report.

Sources (fact-check):

• https://www.business-standard.com/companies/quarterly-results/itc-q2-results-net-profit-declines-18-45-to-4-229-crore-revenue-up-44-126110201234_1.html
• https://www.theweek.in/news/biz-tech/2026/11/02/itc-q2-results-net-profit-falls-1845-per-cent-despite-strong-revenue-growth-middle-east-war-adds-to-costs.html
• https://www.business-standard.com/amp/markets/news/itc-up-1-after-weak-q2-analysts-see-gradual-recovery-in-cigarette-biz-126110300289_1.html