ITC Q1FY26 Brokerage Verdict: Cigarette And FMCG Shine While Agri And Paper Business Weigh Down

ITC – India’s largest cigarette manufacturer – reported a steady June-ended quarter. Though the operating profit was slightly below Street estimates, brokerages have continued to maintain their positive stance on ITC.The company reported a volume growth of around 6-6.5% in its core cigarette business, which is not only at a multi-quarter high but also ahead of many other FMCG peers. Brokerages expect the second half of the financial year 2026 to be better on the back of demand recovery and lower raw material cost.In the Nifty FMCG index, ITC has the most number of ‘buy’ ratings with a return potential of 20%. Of the 39 analysts tracking the company, 37 have a ‘buy’ rating with a consensus target price of Rs 498. Here's what brokerages say:MacquarieMaintain Outperform with TP of Rs 500Inline Q1; healthy cigarette volumes; paper weak6.5% cigarette volume growth and mix improvement partly offsetting leaf tobacco inflationITC sees signs of urban recovery in FMCG and saw correction in leaf tobacco costs in current crop cycleContinued weakness in paper is concerning, the demand recovery across cigarettes/ FMCG make us constructive on growthJefferiesMaintain Buy with TP of Rs 535Cigarette volume growth accelerated to a multi-quarter high of >6%Volume growth continued to be in excess of many of the FMCG peersSegment Ebit margins continued to trend down although Ebit was just inlineOther segments reported lower than expected Ebit mainly due to margin pressureOverall Ebitda growth was muted at 3%, a slight miss to estimatesMSMaintain Overweight with TP of Rs 500Broadly in line; improving trendsCigarettes: Differentiated and premium offerings continue to perform wellPaper: affected by subdued realisations, low-priced supplies from global markets and surge in domestic wood pricesHSBCMaintain Buy with TP of Rs 510Cigarettes stable, other parts mutedQ1 revenue beat by 10%, Ebitda 3% miss on agribusinessCore cigarettes, FMCG business performance in lineContinue to like ITC’s valuation; stable volume growth in cigarettes and scaling of the FMCG businessCitiMaintain Buy; cut TP to Rs 500 from Rs 520Cigarette volume strong; profit impacted by competition, inflationOther FMCG business witnessing growth improvementSee continued steady cigarette volume growth and an eventual margin recovery from FY27E onwardsGoldman SachsMaintain Buy with TP of Rs 490Revenue growth improving, margins poised for recovery in H2FMCG growth improves, margin recovery likely in H2Paper business margins weaken further, but likely to have bottomedNirmal BangUpgrade to Buy from Neutral; hike TP to Rs 485 from Rs 465Cigarette volume growth healthy, valuations inexpensiveSee EPS growth between FY25 and FY27 to be around 7.5% Vs 2.6%/5.2% seen in last 2/5 yearsWith improving earnings prospects and improvement in ROCEs, believe 20% premium to the 5-year average multiple is justifiedNuvamaMaintain Buy; hike TP to Rs 540 from Rs 532Growth intact; margins subduedAgri and cigarettes segment drive growth, margin drag persistsStay positive on ITC given early trends of urban revival and broad-based growth across segmentsPL CapitalMaintain Buy; cut TP to Rs 530 from Rs 538Q1: Cigarette volumes up 6.5%, broad-based margin pressure across segmentsFMCG shows QoQ uptick; paper margins pressure likely till H1Believe ITC offers a favorable risk reward and a dividend yield of 3.7%PhillipCapitalMaintain Buy with TP of Rs 480Multi-engine growth on track despite cost pressuresSee early signs of easing in leaf tobacco pricesThis augurs well for the segment margin in H2FY26Expect a meaningful improvement in both revenue and margins for the FMCG businessKotak SecuritiesMaintain Add; cut TP to Rs 470 from Rs 480Soft quarter on expected lines; H2 outlook betterCigarette segment—good revenue growth offset by margin pressureITC noted early signs of a recovery in urban consumption in the quarterProfitability likely to improve in H2FY26E.ITC Q1 Results: Profit Stays Flat Even As Revenue Grows 21%

ITC Q1FY26 Brokerage Verdict: Cigarette And FMCG Shine While Agri And Paper Business Weigh Down

Brokerages expect the second half of the financial year 2026 to be better on the back of demand recovery and lower raw material cost.

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ITC Q1FY26 Brokerage Verdict: Cigarette And FMCG Shine While Agri And Paper Business Weigh Down

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