ITC Q4 Results Outlook: Mixed Expectations
FMCG conglomerate ITC Ltd. is slated to announce its fourth-quarter (Q4) results for the financial year 2026 later today. Market analysts generally anticipate a largely flat year-on-year (YoY) growth in both net profit and sales for the March quarter. Alongside the earnings announcement, the company's board will also consider a final dividend payout for FY27.
Brokerage firm JM Financial projects a slight 1.9 percent YoY decline in net profit, estimating it at Rs 4,781.80 crore, despite a marginal 2.8 percent YoY rise in sales to Rs 18,770 crore. In contrast, Kotak Institutional Equities forecasts a 3.3 percent YoY increase in net profit to Rs 5,034 crore and a 7.2 percent YoY jump in sales to Rs 18,498 crore. Nuvama, another leading analyst, pencils in a marginal 0.4 percent YoY decline in net profit to Rs 4,853.20 crore, with sales expected to fall 1.3 percent to Rs 17,019.10 crore.
Cigarette Segment Faces Headwinds
The performance of ITC's crucial cigarette segment is expected to have been significantly impacted during Q4 FY26. Analysts point to the transition to a new taxation structure and one-off realization gains experienced in February as key factors. The month of February saw strong realizations and volumes initially, but these were followed by weaker primary sales after price hikes were implemented.
March experienced subdued volume and value growth, largely due to channel stocking that occurred in the preceding two months. Kotak estimates a 1 percent degrowth in cigarette volumes, while Nuvama expects flat volumes compared to strong growth in previous quarters. Furthermore, cigarette EBIT (Earnings Before Interest and Taxes) growth is estimated at just 3 percent YoY, with margins potentially declining by 100 basis points due to sustained higher leaf tobacco costs and insufficient price hikes in March to fully offset profitability impacts.
Performance Across Other Business Verticals
Beyond cigarettes, ITC's other business segments show varied performance expectations:
- FMCG Business: This segment is anticipated to expand by 10 percent YoY, with a significant 37 percent YoY surge in EBIT, driven by a favorable base and improving margins.
- Agri-Business: Revenue for the agri-business is likely to fall by 10 percent YoY, primarily due to disruptions in shipments related to the Middle East. However, profits in this segment are projected to soar by 42 percent YoY, benefiting from margin recovery.
- Paperboard Business: The paper business is expected to report a modest 3 percent YoY revenue growth, but profits may inch down by 2 percent YoY, attributed to high import competition and limited operating leverage.
Analyst Target Prices for ITC Shares
Ahead of its Q4 results, various brokerages have set target prices for ITC shares, largely ranging between Rs 305 and Rs 399. BNP Paribas maintains an 'Outperform' rating with a target of Rs 360. Investec has set a target of Rs 349, while Macquarie's target stands at Rs 330. Other firms, including MOFSL, ICICI Securities, and IIFL Securities, have targets within the Rs 320-335 range. As of the report date, ITC's stock was trading around Rs 308.25.