ITC Limited has reported an 18.5% decline in consolidated net profit for the second quarter of the fiscal year, highlighting the impact of significant tax burdens on its core cigarette division. According to the company's financial disclosure, net profit fell to Rs 4,229 crore during the September quarter, down from Rs 5,187 crore recorded in the same period of the previous year. Despite the decline in profitability, the company's net revenue saw a 5% increase, reaching Rs 20,454 crore, compared to Rs 19,455 crore reported a year earlier.
Operating profitability also faced pressure during the quarter, with consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) dropping by 15.7% to Rs 5,645 crore from Rs 6,695 crore. The company identified its cigarette business as the primary contributor to this downturn. Segment profit for cigarettes decreased by 27.2%, falling to Rs 3,813 crore, while net revenue from this specific category declined by 21%. ITC officials attributed these figures to unprecedented increases in cigarette taxes, which have consistently pressured legal industry volumes.
In response to these market pressures, the company noted that it has introduced new variants and strengthened its overall product portfolio to protect its market share and compete against illicit or smuggled alternatives. While the segment remains under pressure, the company observed an improvement in performance relative to the preceding quarter. Notably, gross revenue from cigarettes saw a 78.1% surge to Rs 15,536 crore, a figure largely driven by the impact of higher taxes included within gross sales.
Conversely, ITC’s non-cigarette FMCG business delivered its strongest revenue growth in 14 quarters. This segment recorded a 19% year-on-year rise in consolidated revenue, marking the fourth consecutive quarter of double-digit expansion. Growth was broad-based, with categories such as packaged foods, stationery, personal care, and homecare products recording growth rates exceeding 20%. The standalone FMCG-Others business reported a 15.7% increase in revenue to Rs 6,967 crore, accompanied by a 27.8% rise in segment profit.
The company further reported a significant recovery in its paperboards, paper, and packaging segment. Revenue for this division rose 35.9% to Rs 3,016 crore, with profit climbing 47.6% to Rs 282 crore. This performance includes the contributions from the Century Pulp and Paper undertaking, which was acquired by ITC on August 1, 2026. Even excluding this acquisition, the paper segment experienced a 10% revenue increase and a 52% rise in profit, supported by stronger exports and robust demand.
The agriculture business also reported positive momentum, with a 12% increase in revenue to Rs 4,452 crore, driven largely by leaf tobacco exports and value-added product categories. Segment profit for this division rose by 11.2% to Rs 511 crore. However, the company acknowledged that ongoing trade disruptions linked to the conflict in West Asia and delays in customer orders have continued to impact agricultural exports.
Looking ahead, ITC indicated that its strategy of cost management, product mix optimization, and calibrated price increases played a vital role in protecting margins despite higher input costs. While wood prices remain elevated due to demand from competing industries and lower harvests, the company maintains that its digital-first and organic brand portfolio—which includes names such as Yoga Bar and Mother Sparsh—continues to show promise, with a combined annual revenue run rate now exceeding Rs 1,800 crore.
Comments