ITC shares to be in focus on Tuesday as Q2 net profit drops 18.5% on higher cigarette taxes
A Ksheerasagar
Diversified conglomerate ITC is likely to remain on investors’ radar on Tuesday, November 3, after the company reported another set of weak numbers for the September quarter, weighed down by higher input costs and increased taxes on cigarettes, which hit profitability.
The company reported a consolidated net profit of ₹4,229.33 crore after market hours on Monday, down 18.45% from ₹5,186.55 crore in the July-September quarter a year ago. However, revenue from operations rose 43.85% to ₹30,578.4 crore in the second quarter of FY27, compared with ₹21,255.86 crore in the year-ago period.
The cigarettes business continued to face pressure from unprecedented tax increases, which affected legal industry volumes and raised the risk of consumers shifting to illicit products.
Operating profit from its cigarettes business, which brings in the bulk of the group's earnings, fell more than 27% year on year to ₹3,813 crore. ITC said it has introduced new variants and strengthened its portfolio to protect its market position.
The FMCG business sustained strong double-digit revenue growth of 19%, led by biscuits, snacks, noodles, spices and homecare products. However, sharp input cost increases weighed on the business, although improved product mix, cost management and calibrated price hikes helped expand segment EBITDA margins by over 50 basis points year-on-year.
The paperboards and packaging segment reported a strong recovery, with revenue rising 36% year-on-year and segment PBIT increasing 48%. Improved demand, pricing actions and strong performance in value-added products and exports supported growth, while elevated wood prices continued to pose a cost challenge.
The agri business recorded 12% revenue growth, driven by value-added products and leaf tobacco exports. However, West Asia-related disruptions and delayed customer orders affected overall performance.
Separately, the food-tech business recorded 53% growth in gross merchandise value (GMV), while annual recurring revenue (ARR) crossed ₹320 crore, it filing showed.
The shares continue to crash on Dalal Street in 2026, hitting multi-year lows as near-term headwind clouds the company's growth prospectus. The Government of India earlier this year imposed a higher excise duty on cigarettes, while surging key input prices, such as sugar, copra and palm oil, have sent the stock into a tailspin.
In August, the stock hit a three-year low before seeing some modest recovery in the following months. The shares began the year with a massive drop of 20% in January, and the weakness persisted in the subsequent months, resulting in a 34% drop so far.
The fall not only created significant wealth erosion for shareholders but also wiped out ₹1.72 lakh crore in the company's market capitalization, which fell to ₹3.33 lakh crore at Monday's close.
To be precise, the stock came under pressure after touching a record high of ₹499 in September 2024 and has so far lost 47% from that peak. For a blue-chip stock, this kind of fall is a rare occurrence, but it highlights the deepening concerns.
A Ksheerasagar
Ksheera Sagar has been working as a Market Research Analyst at LiveMint for the past four years, covering stocks, commodities, and broader financial markets. In this role, he closely tracks daily market movements, corporate earnings, sector trends, and macroeconomic developments. <br><br> He has over a decade of experience in the financial services industry and has previously worked with multiple organisations, including global investment bank J.P. Morgan, bringing strong research experience into the newsroom. <br><br> During his career, he has gained extensive exposure to equity research, market analysis, and financial data interpretation, strengthening his expertise across asset classes and market cycles. <br><br> He is known for his data-driven analysis and crisp, listicle-style market stories that break down complex financial developments across key markets for a wide audience. His strong research skills enable him to write detailed and insightful stories on stocks and sectors, focusing on the underlying factors driving market movements. <br><br> His work combines quantitative insights with clear storytelling, presenting financial developments in a clear and structured manner. Moreover, he enjoys writing multibagger and listicle-style copies. Outside of work, Ksheera enjoys playing the piano and exploring new places. He has a keen interest in travel, music, and continuously learning about global markets and economic trends.
Get Latest real-time updates
Catch all the Business News , Market News , Breaking News Events, JIO IPO Listing Today LIVE and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
HomeMarketsStock MarketsITC shares to be in focus on Tuesday as Q2 net profit drops 18.5% on higher cigarette taxes
✕
Wait for it…
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.