ITC Ltd., a prominent Indian conglomerate, is slated to release its second-quarter fiscal year 2027 earnings today, November 2, 2026. Analysts project a notable 20.25% year-on-year decline in adjusted net profit, reaching approximately Rs 4,136 crore for the September quarter. This expected dip comes despite a modest 3.12% rise in consolidated net sales, forecasted to hit Rs 20,110 crore.
The company's shares were trading slightly higher on the BSE at Rs 266.30 apiece ahead of the announcement. However, ITC has been the worst-performing Nifty stock since Diwali 2025, experiencing a significant 35.43% fall compared to the Nifty's 9.73% decline over the same period. Despite this, the 12-month consensus target price stands at Rs 321.83, suggesting a potential upside of 21%.
Cigarette Business Faces Tax Headwinds
A primary driver for the anticipated profit contraction is the performance of ITC's core cigarette business. Experts anticipate an 8% decline in cigarette volumes, largely attributed to price increases implemented to offset higher taxes. Nomura notes that ITC raised prices again in late September, aiming to restore profit per stick to pre-tax hike levels by the end of March.
Emkay Global forecasts a 21% decline in net sales for the cigarette segment, coupled with a 29% drop in EBIT (Earnings Before Interest and Taxes) due to operating deleverage following an unprecedented excise duty hike effective February 1.
Mixed Performance Across Other Segments
While the cigarette division faces challenges, other segments show varying degrees of growth:
- Other FMCG: Expected to deliver 13% revenue growth year-on-year, with an 8% increase in EBITDA, albeit with a 50-basis-point contraction in the EBITDA margin to 9.5%.
- Agri Business: Forecasted to report 6% revenue growth.
- Paperboards and Packaging: Anticipated to show robust growth of 30% year-on-year.
Analyst Outlook and Key Monitorables
Systematix highlights several key factors for investors to monitor, including cigarette volume trends, pricing strategies, FMCG demand, and the performance of the Agri and paper divisions. They also point to raw material (RM) cost inflation as a concern. The brokerage expects ITC's margins to contract quarter-on-quarter as recent sharp increases in cigarette taxation have not been fully offset by price adjustments, while FMCG input costs remain inflationary. Stabilising leaf tobacco costs may offer some partial relief.
Overall, a domestic brokerage consensus projects ITC's net sales to grow 3% year-on-year, but EBITDA is likely to decline over 15%, primarily due to the significant drag from the cigarettes segment.