ITC shares in focus amid reports of cigarette price hikes; here is what we know so far

Shares of ITC Ltd, the Kolkata-headquartered diversified conglomerate, are expected to hog the limelight on Thursday, November 12, amid news reports that the company has raised prices across its cigarette portfolio to navigate cost pressures and tax headwinds.

The latest revision marks the second price hike for Gold Flake Premium this year. The brand had raised prices from ₹115 to ₹125 per pack in June.

The price hike comes at a challenging time for ITC's cigarette business, which has been facing pressure following the increase in cigarette taxes. The company said in its September-quarter commentary that legal cigarette volumes remained under pressure, partly due to the widening price gap between legal products and illicit alternatives.

ITC is adopting a calibrated pricing strategy to limit the risk of consumers shifting to illicit products while protecting its consumer franchise.

What investors should watch

Analysts note the price increase could support cigarette realisations and help cushion the impact of higher taxes.

However, the key monitorable will be whether higher prices affect legal cigarette volumes and whether the company can pass on the increased costs without accelerating the shift towards illicit products.

ITC Q2 FY27 earnings

ITC Ltd reported an 18.45% decline in its consolidated profit to ₹4,229.33 crore for the September quarter of FY 2026-27 (Q2 FY27) due to higher expenses.

It had posted a consolidated profit of ₹5,186.55 crore in the July-September period a year ago, according to a regulatory filing by the Kolkata-headquartered company.

Its revenue from operations stood at ₹30,578.4 crore, up 43.85% in the second quarter of FY27, compared to ₹21.255.86 crore a year ago.

ITC said in its earnings statement that it witnessed "robust growth across all Non-Cigarette Business segments".

The FMCG business reported a fourth consecutive quarter of double-digit revenue growth, with EBITDA margin expanding 50 bps YoY amid inflationary pressures, it added.

Besides, ITC had "strong recovery momentum" in the Paper Segment, and its agri Business also delivered robust growth despite West Asia-led trade disruptions.

ITC's total expenses stood at ₹25,462.44 crore, up 69.6% YoY in the September quarter.

Its total consolidated income, including other income, was ₹31,085.76 crore, up 42.33% in Q2 FY27.

"The operating environment continued to be characterised by heightened uncertainty amidst renewed geopolitical tensions and trade disruptions. Crude oil and crude-linked input prices remained elevated, while supply chain disruptions and higher freight costs persisted," said ITC.

It further added that global inflationary pressures intensified, driven by higher energy and food prices, alongside elevated sovereign bond yields and tighter financial conditions.

"In India, headline inflation moved up, driven by a broad-based increase across food, fuel and core components," the company said.

In the September quarter, ITC's revenue from the Total FMCG business, which also includes cigarettes, climbed 51.58% to ₹23,455.47 crore.

ITC's revenue from the cigarette business grew 72.47% to ₹16,237.11 crore.

However, "industry volumes remain under pressure due to unprecedented tax increase", said ITC.

Earlier this year, the government implemented a major tax hike on cigarettes and tobacco products, raising the Goods and Services Tax (GST) to a flat 40% and replacing the old compensation cess with a new additional excise duty ranging from ₹2,100 to ₹8,500 per 1,000 sticks depending on the length.

The company focused on disciplined execution and a calibrated response to navigate the unprecedented tax increase, mitigate the risk of a disproportionate shift in volumes to illicit trade, and protect its consumer franchise while balancing the interests of all stakeholders, the company said.