Mumbai: ITC Ltd reported strong March-quarter revenue growth led by its cigarettes business, even as higher taxes on tobacco products and rising geopolitical risks are increasing the importance of its fast-growing consumer goods (FMCG) portfolio.
The Kolkata-headquartered cigarettes-to-atta conglomerate posted a 17% year-on-year (y-o-y) rise in revenue from operations to ₹23,821 crore and a 6% increase in profit from continuing operations to ₹5,469.74 crore.
The revenue growth was driven by a nearly 30% rise in cigarette sales and 15% growth in the FMCG-Others business.
However, even as cigarette profits grew 7% to ₹5,797.30 crore, compared to 4.7% in the year-ago period, the FMCG business saw a more than 1.5x rise in profits to ₹525.78 crore in Q4 of FY26.
The company attributed the low profit growth in cigarettes to higher taxes imposed this February. In a press statement on Thursday, ITC warned that higher cigarette taxes could boost illicit trade and hurt the broader tobacco value chain, including farmers, retailers and MSMEs, “thereby sub-optimizing the revenue potential of the tobacco sector”.
According to the statement, the company is introducing “staggered pricing action” and leaning on its portfolio of well-known brands to combat a potential rise in the illegal and grey market for cigarettes.
“In view of the significant increase in taxes on cigarettes, the domestic demand for leaf tobacco in the near term is expected to be subdued, weighing on the prospects of the key stakeholders of [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 staples brand 24 Mantra, meat and ready-to-eat snacks brand Prasuma, and baby care brand Mother Sparsh—reported a 60% y-o-y jump in revenues for FY26, with an annual run rate of over ₹1,350 crore, according to the company’s investor presentation.
ITC said growth in online retail and modern trade remained strong, with the two channels now accounting for over a third of FMCG sales.
For the full fiscal year FY26, consolidated revenue from operations was up 10.1% to ₹89,913.33 crore, while profits after tax from continuing operations were up just under 5% to ₹21,018.15 crore. Earnings before interest, taxes, depreciation, and amortization (Ebitda) for the year was up 4.9% to ₹25,208.22 crore.
Shares of ITC Ltd closed up 0.16% on the National Stock Exchange, while the benchmark Nifty50 closed flat in the day's trade.
West Asia impact
ITC said the West Asia crisis has pushed up input costs across businesses. A weaker rupee has made imported edible oils used in snacks more expensive. Rising crude oil prices have also made inputs like plastic packaging more expensive. Rivals such as Hindustan Unilever have already hiked prices across personal and home care products.
The disruptions also weighed on ITC’s agri business. Revenue from the agri segment fell 14.2% y-o-y to ₹3,166.65 crore, while profits declined more than 20% to ₹200.11 crore.
“Supply chain disruptions and logistical challenges, following the West Asia conflict towards the end of the year, led to deferrals of call-offs by certain customers,” the company said in its earnings note. “On the domestic front, the government imposed stock limits and export restrictions on key agri commodities to ensure food security, which limited the opportunities for the business.”
The company added that the agri segment also faced disruptions from US tariffs and climate-related supply uncertainties in key producing regions.
Looking ahead, ITC flagged risks from an El Niño year that may weaken monsoons and hurt consumer demand this year.
Some analysts are not overly concerned yet. Brokerage firm Nomura said in a note this week that while a potential El Niño and below-normal monsoon could hurt food production, the impact on inflation may be less severe than in the past due to government interventions and reduced dependence on monsoon-linked food supplies. The brokerage said it expects headline inflation to stay at 5% in FY27.
Others remain cautious. Anuj Sethi, senior director of credit rating firm Crisil Ratings said in a note on Thursday that higher crude oil prices and a weaker monsoon could squeeze household budgets this fiscal year.
“As these price increases are passed on to retail consumers, including through fuel price hikes, disposable incomes are likely to be hit. Furthermore, the rural market, which had outperformed the urban segment in the past two years, is expected to see a reversal of fortunes this fiscal, given the forecast of a below-normal monsoon,” Sethi added.
