Noida, May 22 (APAC Media): Shares of ITC Ltd fell around 1.5% in early trade on Friday after the company reported its March quarter earnings and announced a final dividend for FY26, with investors reacting to a decline in reported profit despite steady underlying performance.
The stock slipped to an intraday low of about ₹303 on the BSE following the results.
ITC reported a year-on-year decline in consolidated net profit for the fourth quarter, largely impacted by a high base effect from exceptional gains in the previous year linked to its hotel business demerger. On an adjusted basis, profit from continuing operations showed steady growth.
Revenue from operations rose during the quarter, supported by stable demand across its cigarettes and FMCG businesses.
The board of ITC recommended a final dividend of ₹8 per share for FY26, maintaining its track record of regular shareholder payouts.
The cigarettes segment remained the key earnings driver, posting stable performance despite regulatory and tax-related pressures. The FMCG business also recorded steady growth with improved operating efficiency.
Broking Views
Capital 360 One maintained its “BUY” rating, highlighting that price hikes in the RSFT segment remain an important factor to monitor. The company has already increased prices in the DSFT segment, which has helped offset the impact of recent tax changes. However, RSFT—contributing about 45% of total volumes—continues to face pressure, as the incremental tax impact is still higher than the price increases implemented so far. Although cigarette volumes are expected to remain weak in Q1, the recent price increases are likely to provide some cushion to profitability. Overall, performance is expected to improve significantly in Q2.
Nuvama Institutional Equities maintained a “Hold” rating on the stock.
ITC reported a mixed Q4 performance, with sales declining 7% YoY and coming in below both its and the Street’s estimates. However, EBITDA rose 7% YoY and beat estimates, supported by a sharp reduction in SIT costs.
In the cigarette segment, net sales fell 24% YoY, while EBIT increased 7% YoY, aided by transition-related benefits, a trend also seen in peers such as VST and Godfrey following sharp tax hikes from Feb ’26. The broking noted that Q4 appears to be a transition phase for the industry and expects the elevated profitability levels to normalise in Q1FY27.
On segmental performance, FMCG revenue and EBIT grew 15% and 51% YoY, respectively, while PPP sales and EBIT rose 2% and 21%. The agribusiness remained weak, with sales and EBIT declining 16% and 30% YoY, impacted by the West Asia conflict.
Systematix Institutional Equities maintained a “Hold” rating on the stock.
Systematix Institutional Equities maintained a “Hold” rating on ITC, noting that Q4FY26 revenues came in below both its and consensus estimates, though earnings registered a modest beat in a quarter shaped by sharp changes in cigarette taxation and subsequent price hikes.
Standalone net revenue declined 7% YoY, primarily due to a steep 4.5x YoY increase in excise duty on cigarettes, despite price hikes of around 25%+. EBITDA and adjusted PAT rose 7% and 5% YoY, respectively.
The cigarette segment, which accounts for roughly 85% of overall EBIT, reported strong performance, with sales growing 32% YoY driven by pricing, alongside an estimated 5% YoY volume growth.
However, channel checks suggest further price hikes of around 15% may be required, while distributor-level volumes—particularly in the Kings (84mm) segment have seen a sharp decline in recent months.
In FMCG (about 30% of gross sales and 8% of EBIT), the company delivered robust 15% YoY growth, supported by strength across atta, biscuits, noodles, snacks, and premium personal wash categories.
The agribusiness, which contributes about 14% of sales, declined 16% YoY on a high base, with exports impacted by the West Asia conflict. Paperboards, accounting for around 10% of sales, grew 2% YoY, aided by better performance in speciality papers.
Disclaimer: Views expressed are those of experts and do not reflect APAC Media. This is for informational purposes only, not financial advice. We are not responsible for investment decisions. Please consult a qualified financial advisor before investing.
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