ITC shares rally over 2% on September 16; here is what is driving the stock

ITC Ltd.’s share price rallied as much as 2.15% to ₹263.55 apiece on the NSE on Wednesday, September 16.

The stock drew buying interest as news reports said that the diversified conglomerate has undertaken another round of cigarette price hikes, with Classic Connect prices rising by around 10% to ₹21.4/stick, while Gold Flake Super Star now costs ₹89 for a 10-cigarette pack.

This comes after the earlier price increases in February, following the nearly 40% tax hike announced effective February 1.

Why the price hike is important

The cigarette price hike is significant for ITC as the segment is a key earnings driver for the company. Cigarettes account for around 40% of ITC’s segment revenue, but contribute a much larger share of its operating profit.

Therefore, any increase in cigarette prices can help ITC offset higher taxes, input costs, or other pressures on margins, while supporting revenue and profitability, provided the price hike does not lead to a meaningful drop in cigarette volumes.

Other details for market participants

• On September 1, 2026, shares of ITC surged after the announcement that ITC Infotech, its wholly owned subsidiary, will merge with Bengaluru-based Happiest Minds Technologies to create an AI-first enterprise with a $1 billion turnover by FY28.

As a precursor to the merger, ITC Infotech will acquire a 22.106% stake from Happiest Minds promoter Ashok Soota and Ashok Soota Medical Research LLP, according to regulatory filings.

Following the stake purchase, Happiest Minds will be amalgamated with and into ITC Infotech.

The combined entity, with a global workforce of over 19,000 professionals, will bring complementary capabilities to deliver a full-stack value proposition for end-to-end solutions spanning build, intelligence, and operations whilst expanding into high-potential verticals including hi-tech, healthcare, and edtech.

• In July 2026, ITC Chairman & Managing Director Sanjiv Puri said the company expects the FMCG market to expand to around ₹8 lakh crore by 2035 as the conglomerate looks to strengthen its position through a combination of brand-building, digital commerce expansion, and strategic acquisitions.

Addressing shareholders at the company's Annual General Meeting (AGM), Puri said the Indian FMCG market was "poised for significant expansion" as the consumer landscape evolves rapidly.

"The rise of aspirational Bharat, premiumisation, Gen Z and Gen Alpha consumers, expanding digital access and the growth of quick commerce are reshaping categories, channels and expectations," Puri said.

To capitalise on these trends, ITC is leveraging an AI-led consumer insight ecosystem that enables micro-segmentation and supports the development of differentiated offerings tailored to evolving consumer needs, lifestyles and occasions, Puri said.

He also underscored the growing role of online and omnichannel commerce in the company's growth strategy.

"These differentiated products reach millions of homes through your company's smart omnichannel network with unique multidimensional capabilities across ambient, chilled, frozen and perishable supply chains," Puri said.

ITC Q1 FY27 earnings

ITC reported a 15.6% decline in its consolidated profit to ₹4,508.79 crore for the June quarter of 2026-27 (Q1 FY27), mainly due to an increase in expenses.

It had posted a consolidated profit of ₹5,343.41 crore in the April-June quarter a year ago, according to a regulatory filing by the Kolkata-headquartered company.

ITC's revenue from sale of products increased by 27.82% to ₹29,409.82 crore in the June quarter of FY27. Its revenue from operations was at ₹29,523.3 crore, up 27.64% in the first quarter of FY27 compared to ₹23,129.35 crore a year ago.

"Q1 FY27 was marked by heightened uncertainty in the operating environment due to the ongoing conflict in West Asia, which triggered a sharp increase & volatility in the price of crude oil & crude-linked products along with significant trade & supply chain disruptions," said ITC.

The company said it has "robust performance by Group companies" led by ITC Infotech, Surya Nepal, Sproutlife Foods and ITC Hotels.

ITC's total expenses were at ₹24,809.95 crore, up 48% YoY in the June quarter. Its total consolidated income, which includes other income, was at ₹30,179.01 crore, up 26.74% in the quarter under review.