ITC reported consolidated net cigarette revenue (Rs 5,930 crore) contraction of 23% (in line). Given such a sharp increase in taxes, ITC has adopted a calibrated price hike strategy (unlike immediate tax pass-on historically) to protect drop-out of consumers from legal to illegal cigarette markets. Volume decline was in high single digits. Cigarette price hikes are still active, yet cumulative hike has not reached the tax-neutral level.
NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
-
Indian Markets Turning Corner After Two Tough Years, Says Sandeep Tandon -
NDTV Profit Ignite 2026: Experts See Opportunity In Equities, Stay Bullish For Long-Term -
Buy Right, Sit Tight Does Not Work for Individual Stocks, Says Dinshaw Irani -
'Worst Is Behind': Quant MF Sees Market Bottom, Flags 'Extreme Euphoria' In Midcaps -
India's Mutual Fund Industry Could Become A $1 Trillion Opportunity, Say Fund Managers -
'Foreign Investors Are Baraatis': Raamdeo Agrawal's Take On LTCG Tax -
Stay Invested Through Market Cycles: Raamdeo Agrawal at NDTV Profit Ignite -
Ramesh Damani Remains Bullish On India For Next 20-30 Years, Sees Bargains Amid Market Weakness -
CAS Came After A Long Consultation Process: SEBI Chairman Tuhin Kanta Pandey AT NDTV PROFIT IGNITE -
Aim To Cut FPI Onboarding Time From Mth To Five Days: SEBI Chairman Tuhin Kanta Pandey AT NDTV PROFI
Motilal Oswal Report
Domestic brokerage firm Motilal Oswal has reiterated its Neutral rating on ITC Ltd. with our SoTP-based target price of Rs 285, implying 17 times Sep'28E earnings per share.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
The brokerage largely maintains its EPS estimates for FY27 and FY28.
According to Motilal Oswal ITC is still in the transitory phase, with the full tax hike yet to be passed on to consumers. Thus, the brokerage believe Cigarette's revenue and EBIT performance will be volatile in the near term.
The FMCG business continues to perform well, with robust improvement in margins. However, the brokerage believe earnings pressure on cigarettes would offset near-term catalysts, recovery in FMCG and Paper and comfort on valuation.
ALSO READ | ITC Q2 Review: Analysts See Cigarette Earnings Recovery By March, But Flag Risks
ITC has a full cigarette portfolio to better navigate the tax increase, but competitive pressure from illicit cigarettes will take a toll on the formal cigarette industry, believes Motilal Oswal
ITC Q2 FY27 Results Highlights
- ITC reported consolidated net cigarette revenue (Rs 5,930 crore) contraction of 23% (in line). Given such a sharp increase in taxes, ITC has adopted a calibrated price hike strategy (unlike immediate tax pass-on historically) to protect drop-out of consumers from legal to illegal cigarette markets.
- Volume decline was in high single digits. Cigarette price hikes are still active, yet cumulative hike has not reached the tax-neutral level.
- Consolidated EBIT declined 26% YoY to Rs 4,040 crore (estimate: Rs 3,940 crore).
- Standalone EBIT declined 27% YoY.
- Consolidated FMCG segment sales grew 19% YoY (ex-Atta up 23%) (beat).
- EBIT grew 31% YoY to Rs 580 crore (estimate Rs 480 crore).
- EBIT margin expanded 70bp (-70bp in base) to 8%.
- Agri business revenue rose 13% YoY to Rs 4,550 crore (est. Rs 4,120 crore, -16% in 1QFY27).
- EBIT margin expanded 20bp YoY to 11.4% (est. 8.5%, 4.4% in q1 FY27).
- Paper business sales rose 36% YoY to Rs 3,020 crore (include CPP acquisition). EBIT increased 51% YoY to Rs 270 crore (est. Rs 280 crore), while EBIT margin expanded 90bp YoY to 9.1%.
- Paperboard LTL revenue rose 10% and EBIT rose 52% YoY.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
