Synopsis: Large-cap FMCG company’s shares are in focus today after announcing strong Q2 results.
The largest cigarette manufacturer and seller in the country is in the spotlight today after posting Q2FY26 results. Read the article below for detailed insights into its performance and future outlook.
With a market capitalization of Rs. 5,32,057.27 crore, the shares of ITC Limited is trading at at Rs. 424.70, up by 1.42 percent from its previous closing price of Rs. 418.75. The stock has touched an intraday high of Rs. 425.90 in today’s trading session, implying 1.7 percent upside from previous close price.
Q2FY26 Results
ITC Limited reported Rs. 19,502 crore in revenue for the second quarter of FY26, a 2.44 percent decrease over Rs. 19,990 crore for the same period in FY25. It decreased by 9.27 percent as compared to Rs. 21,495 crore in Q1 FY26.
The company’s EBITDA for Q2 FY26 stood at Rs. 6,695 crore, down by 1.78 percent from Rs. 6,816 crore in Q1 FY26, but inclined by 2.18 percent from Rs. 6,552 crore in Q2 FY25.
The consolidated net profit for the second quarter of FY26 was Rs. 5,187 crore, which was 2.92 percent lower than the Rs. 5,343 crore reported in the previous quarter and increased by 2.63 percent from Rs. 5,054 crore in Q2 FY25. Profit growth was also reflected in earnings per share (EPS), which increased to approximately Rs. 4.09 in Q2 FY26 from Rs. 3.99 in Q2 FY25.
Segment-wise Performance
FMCG – Cigarettes
Segment net revenue rose 6.8 percent YoY, and PBIT grew 4.3 percent YoY, led by differentiated and premium offerings. Strategic interventions in key markets and efforts to counter illicit trade supported volume-led growth. Although leaf tobacco costs remained high, partial relief came from lower procurement prices and product mix improvements. Stable taxation and enforcement continue to aid legal industry recovery and exchequer revenues.
FMCG – Others
The segment reported 8 percent YoY revenue growth (ex-Notebooks) despite operational challenges from excessive rains and the GST transition. Growth was driven by Staples, Dairy, Premium Personal Wash, and Agarbattis, supported by strong performance in digital-first and organic brands (ARR Rs. 1,100 crore). Segment EBITDA margin improved 50 bps QoQ to 10 percent, aided by commodity price stability and cost management. Premiumisation and new launches under Aashirvaad, Sunfeast, YiPPee!, Bingo!, Savlon, Fiama, and Mangaldeep sustained growth momentum. Notebooks remained weak due to cheap imports and regional competition.
Agri Business
The segment faced a timing difference and high base effect, though H1 revenue rose 7 percent and segment results 10 percent. Leaf tobacco exports grew strongly, supported by expertise and quality. Value-added agri exports were subdued due to delayed orders amid US tariff uncertainty. The business focused on new geographies, scaling value-added products, and supporting ITC’s FMCG and Cigarette segments with traceable sourcing.
Paperboards, Paper & Packaging
The segment’s profit rose 17 percent QoQ with margins improving 90 bps, while revenue grew 5 percent YoY driven by higher volumes and speciality paper demand. The industry continues to face low-priced imports and high wood costs, though wood prices are moderating. Government actions like Minimum Import Price and anti-dumping investigations on certain origins provide relief. ITC remains focused on plantations, cost management, and expanding sustainable packaging solutions, which have grown 2.6x over four years.
FoodTech
A key new growth vertical under ITC Next, FoodTech scaled up operations to 60+ cloud kitchens across 5 cities, with GMV of Rs. 90 crore in H1 FY26 (FY25: Rs. 105 crore). Offerings span four brands, including ITC Master Chef Creations, Aashirvaad Soul Creations, Sunfeast Baked Creations, and Sansho by ITC Master Chef. The platform continues its national rollout with 7 new kitchens added in the quarter.
Analyst View
Morgan Stanley maintained an Overweight rating on ITC with a target price of Rs. 469 (Upside of 10.43 percent), citing resilient cigarette growth and improving FMCG margins. Despite a 4 percent drop in revenue, EBITDA rose 2 percent, Cigarette EBIT grew 4.3 percent YoY, FMCG EBIT 9 percent with margins above 10 percent, and paper margins improved.
Goldman Sachs maintained a Buy rating with a revised target of Rs. 490 from Rs. 480 (Upside of 15.38 percent), expecting margin recovery in the second half as tobacco and wood costs ease. It highlighted cigarette EBIT of over 4.3 percent, better FMCG profitability, and paper margin support from government policies, projecting stronger earnings growth in FY26–27.
Jefferies maintained a buy rating on ITC with a target price of Rs. 535 (Upside of 25.97 percent), citing strong 6 percent year-on-year cigarette volume growth, outpacing many FMCG peers. However, operating margins were under pressure from higher tobacco costs and competition. FMCG growth improved though margins remained weak. Operating profit rose 2 percent, and management expects better momentum ahead.
Citi kept a Buy call on ITC with a target price of Rs. 500 (Upside of 17.73 percent). It noted a 2 percent revenue decline in Q2, mainly due to weakness in the agri business, but revenue excluding agri rose 8 percent. Both operating and net profits were up 2 percent year-on-year. While growth was slower than rivals and margins faced pressure, Citi believes ITC’s strong brands and product mix will sustain market share.
Nomura also retained a Buy rating on ITC with a target price of Rs. 540 (Upside of 27.15 percent), saying results were broadly in line with expectations. It expects a recovery in the paperboard segment, continued expansion in the foodtech vertical, and noted that the agri business was impacted by a high base effect.
About the company
ITC Limited, headquartered in Kolkata and founded in 1910, is a diversified Indian conglomerate operating across FMCG, paperboards, packaging, agri-business, and hospitality sectors. Its FMCG portfolio includes cigarettes, foods, beverages, dairy, personal care, stationery, matches, and agarbattis under popular brands. ITC also produces specialty papers, sustainable packaging, and exports a wide range of agri-products like spices, coffee, and tobacco. Additionally, it offers IT services across various industries, engineering and project management solutions, and property infrastructure services, while also running hotels such as ITC Grand Central in Mumbai.
A return on equity (ROE) of about 27.3 percent, a return on capital employed (ROCE) of about 36.80 percent and a debt to equity ratio of 0 demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 26.3x lower as compared to its industry P/E 52.2x.
Written By Akshay Sanghavi
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