ITC revenue grows 17% as cigarette tax bites, consumer brands surge

Mumbai: ITC Ltd reported strong revenue growth in the March quarter, led by its cigarette business, even as higher taxes on tobacco products and rising geopolitical risks increased the importance of its fast-growing consumer goods (FMCG) portfolio.

The Kolkata-headquartered cigarette-to-attack conglomerate recorded a 17% year-on-year increase in revenue from operations. ₹23,821 crore and 6% increase in profit from continuing operations ₹5,469.74 crore.

The revenue increase was driven by approximately 30% growth in cigarette sales and 15% growth in the FMCG-Others business.

But still Cigarette profits increased by 7 percent ₹Compared to 4.7% in the previous year, the FMCG business saw more than 1.5 times increase in profit at ₹ 5,797.30 crore. ₹525.78 crore in the 4th quarter of FY26.

The company attributed the low profit growth on cigarettes to the high taxes imposed this February. In a press release on Thursday, ITC warned that higher cigarette taxes could increase illicit trade and harm the broader tobacco value chain, including farmers, retailers and MSMEs, “thus suboptimizing the revenue potential of the tobacco sector.”

According to the statement, the company is introducing “tiered pricing” to combat the potential increase in the illicit and gray cigarette market and is relying on its portfolio of well-known brands.

“Given the significant increase in taxes on cigarettes, domestic demand for leaf tobacco is expected to decline in the near term, putting pressure on the prospects of tobacco’s key stakeholders. [the] Indian tobacco industry,” the company added.

Meanwhile, FMCG growth was driven by strong traction in brands such as Aashirvaad, Sunfeast, Savlon and Mangaldeep.

ITC’s newly acquired ‘new age’ brands (including food staples brand 24 Mantra, meat and ready-to-eat snack brand Prasuma and baby care brand Mother Sparsh) reported a 60% year-on-year increase in revenues in FY26; ₹1,350 crore, according to the company’s investor presentation.

ITC said growth in online retail and modern commerce remains strong, with the two channels now accounting for more than a third of FMCG sales.

In FY26, consolidated revenue from operations increased by 10.1% ₹89,913.33 crore, while profit after tax from continuing operations increased by just under 5%. ₹21,018.15 crore. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 4.9% during the year. ₹25,208.22 crore.

Shares of ITC Ltd closed 0.16% higher on the National Stock Exchange, while benchmark Nifty50 ended the day’s trade flat.

West Asian influence

The West Asian crisis has increased input costs across businesses, ITC said. The weakening of the rupee has caused imported edible oils used in snacks to become more expensive. Increasing crude oil prices have also caused inputs such as plastic packaging to become expensive. Rivals like Hindustan Unilever have already increased prices of personal and home care products.

The outages also negatively affected ITC’s agricultural activities. Revenue from the agriculture segment fell 14.2% year-on-year ₹3,166.65 crore while profits fell by more than 20% ₹200.11 crore.

“Supply chain disruptions and logistical challenges following the conflict in West Asia towards the end of the year led to the postponement of calls for some customers,” the company said in its earnings note. “On the domestic front, the government has imposed stock limitations and export restrictions on essential agricultural products to ensure food security, limiting business opportunities.”

The company added that its agriculture segment also faces disruptions due to US tariffs and climate-related supply uncertainties in key producing regions.

Going forward, the ITC flagged risks that could weaken the El Niño year’s monsoon rains and hurt consumer demand this year.

Some analysts aren’t too worried yet. A possible El Niño and subnormal monsoon could hurt food production, but the impact on inflation could be less severe than in the past due to government interventions and reduced reliance on monsoon-related food sources, brokerage firm Nomura said in a note this week. The brokerage firm said it expects headline inflation to remain at 5% in FY27.

Others remain cautious. High crude oil prices and weakening monsoon could squeeze household budgets this fiscal year, Anuj Sethi, senior director at credit rating firm Crisil Ratings, said in a note on Thursday.

“When these price increases are passed on to retail consumers, including increases in fuel prices, disposable incomes are likely to be affected. Moreover, the rural market, which has outperformed the urban segment in the last two years, is expected to see a reversal of fortunes this fiscal, given the forecast for a below-normal monsoon,” Sethi added.