The cigarettes business, which contributes nearly 48% to the total business, remained a key drag on profitability. The segment revenue surged due to an increase in excise duties from February 2026, but profit dropped as the company adopted a staggered pricing strategy to minimise consumer downtrading and prevent migration to illicit trade.
The FMCG-others segment, which contributes one-fifth to the entire business, delivered another strong quarter led by dairy, snacks, noodles and frozen foods, each registering more than 20% growth, alongside mid-teen growth in personal care products.
The agri business faced a challenging quarter due to trade disruptions linked to the West Asia conflict, weaker tobacco demand, and a high base. However, ITC stated the underlying revenue grew 9% after adjusting for wheat timing differences and geopolitical disruptions, aided by growth in value-added agri products such as spices and fruits and vegetables. Growth in paperboards, paper and packaging was aided by improved realisations, moderation in wood costs, stronger demand for value-added products and exports, and strong growth in the packaging business.
Motilal Oswal Financial Services (MOFSL) has also cut FY27-28 EPS estimates by 2% as slower-than-expected increase in cigarette prices is likely to weigh on FY27 earnings.
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