ITC shares gain marginally post Q1 earnings; here is what leading analysts say

ITC Limited had reported a flat standalone net profit at ₹4,912 crore on Friday for the April-June quarter, from ₹4,917 crore in the same period last year.

The company's revenue from operations, however, increased 20% year-on-year (YoY) to ₹21,059 crore during the quarter under review in contrast to ₹17,593 crore in the year-ago period. The strong growth in revenue was driven by cigarettes, agribusiness, and FMCG.

ITC reported stable operational performance as its earnings before interest, taxes, depreciation, and amortisation (EBITDA) grew 3% to ₹6,261 crore in Q1 FY26 as against ₹6,086 crore in the corresponding quarter of the previous fiscal year.

For Q1 FY26, the EBITDA margin contracted to 30% as against 34.5% YoY.

ITC said it saw a resilient performance amidst a challenging operating environment.

At the time of writing the article, shares of ITC were trading at ₹418.35 apiece on NSE, gaining 0.46%.

The company’s FMCG segment’s revenue grew 8.6% YoY (ex-Notebooks). “Overall growth at 5.2% YoY; the notebooks industry continues to operate under deflationary conditions on account of low-priced paper imports and opportunistic play by local/regional players; unseasonal rains during the quarter impact beverage sales,” ITC said.

Staples, biscuits, dairy, premium personal wash, homecare, and agarbattis also drove growth for the FMCG segment. Prices of major commodities like edible oil, wheat, maida, cocoa, soap, noodles, etc. remain elevated on a YoY basis, weighing on margins.

The businesses continued to mitigate the impact through focused cost management initiatives, portfolio premiumization, and calibrated pricing actions, the FMCG major said.

For cigarettes, net segment revenue increased 7.7% YoY as differentiated and premium offerings continue to perform well. Market standing continues to be reinforced through strategic portfolio and market interventions with a focus on competitive belts and countering illicit trade, the firm said.

However, consumption of high-cost leaf tobacco inventory weighs on margins and moderation in procurement prices witnessed in the current crop cycle.

ITC’s agribusiness revenue rose 39% YoY, driven by agri commodity trading opportunities and exports of leaf tobacco.

The paper business revenue rose 7% year-on-year, driven by higher volumes. The paperboard, paper, and packaging segment reflected the impact of the influx of low-priced supplies into global markets, including India.

Analysts at global brokerage firm Jefferies said ITC’s volume growth continued to be in excess of many of the FMCG peers for Q1, and its segment EBIT margins continued to trend down, although EBIT was just in line. Other segments reported lower than expected EBIT, mainly due to margin pressure.

Global investment bank Morgan Stanley analysts maintained its outlook for the company and said the quarter was broadly in line and it sees improving trends.

Another global broking firm, Citi, sees continued steady cigarette volume growth for ITC and an eventual margin recovery from FY27E onwards.

Goldman Sachs analysts expect margin recovery for ITC in the second half of the year. However, it said paper business margins were weak but likely to have bottomed.