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:

Macquarie

• Maintain Outperform with TP of Rs 500

• Inline Q1; healthy cigarette volumes; paper weak

• 6.5% cigarette volume growth and mix improvement partly offsetting leaf tobacco inflation

• ITC sees signs of urban recovery in FMCG and saw correction in leaf tobacco costs in current crop cycle

• Continued weakness in paper is concerning, the demand recovery across cigarettes/ FMCG make us constructive on growth

Jefferies

• Maintain Buy with TP of Rs 535

• Cigarette volume growth accelerated to a multi-quarter high of >6%

• Volume growth continued to be in excess of many of the FMCG peers

• Segment Ebit margins continued to trend down although Ebit was just inline

• Other segments reported lower than expected Ebit mainly due to margin pressure

• Overall Ebitda growth was muted at 3%, a slight miss to estimates

MS

• Maintain Overweight with TP of Rs 500

• Broadly in line; improving trends

• Cigarettes: Differentiated and premium offerings continue to perform well

• Paper: affected by subdued realisations, low-priced supplies from global markets and surge in domestic wood prices

HSBC

• Maintain Buy with TP of Rs 510

• Cigarettes stable, other parts muted

• Q1 revenue beat by 10%, Ebitda 3% miss on agribusiness

• Core cigarettes, FMCG business performance in line

• Continue to like ITC’s valuation; stable volume growth in cigarettes and scaling of the FMCG business

Citi

• Maintain Buy; cut TP to Rs 500 from Rs 520

• Cigarette volume strong; profit impacted by competition, inflation

• Other FMCG business witnessing growth improvement

• See continued steady cigarette volume growth and an eventual margin recovery from FY27E onwards

Goldman Sachs

• Maintain Buy with TP of Rs 490

• Revenue growth improving, margins poised for recovery in H2

• FMCG growth improves, margin recovery likely in H2

• Paper business margins weaken further, but likely to have bottomed

Nirmal Bang

• Upgrade to Buy from Neutral; hike TP to Rs 485 from Rs 465

• Cigarette volume growth healthy, valuations inexpensive

• See EPS growth between FY25 and FY27 to be around 7.5% Vs 2.6%/5.2% seen in last 2/5 years

• With improving earnings prospects and improvement in ROCEs, believe 20% premium to the 5-year average multiple is justified

Nuvama

• Maintain Buy; hike TP to Rs 540 from Rs 532

• Growth intact; margins subdued

• Agri and cigarettes segment drive growth, margin drag persists

• Stay positive on ITC given early trends of urban revival and broad-based growth across segments

PL Capital

• Maintain Buy; cut TP to Rs 530 from Rs 538

• Q1: Cigarette volumes up 6.5%, broad-based margin pressure across segments

• FMCG shows QoQ uptick; paper margins pressure likely till H1

• Believe ITC offers a favorable risk reward and a dividend yield of 3.7%

PhillipCapital

• Maintain Buy with TP of Rs 480

• Multi-engine growth on track despite cost pressures

• See early signs of easing in leaf tobacco prices

• This augurs well for the segment margin in H2FY26

• Expect a meaningful improvement in both revenue and margins for the FMCG business

Kotak Securities

• Maintain Add; cut TP to Rs 470 from Rs 480

• Soft quarter on expected lines; H2 outlook better

• Cigarette segment—good revenue growth offset by margin pressure

• ITC noted early signs of a recovery in urban consumption in the quarter

• Profitability likely to improve in H2FY26E