ITC Prepares for Second Quarter Results as Brokerages Predict Weak Cigarette Sales and Stable FMCG Growth

ITC Limited will announce its financial results for the second quarter of the 2026-27 financial year tomorrow, with shares remaining in focus after closing 0.74 percent higher at 265.60 rupees on BSE on Friday. Brokerages expect a mixed performance, driven by a decline in the core cigarette business and steady growth in the fast-moving consumer goods segment.

Financial Projections

HDFC Securities forecasts a 7 percent overall revenue growth for the conglomerate, while predicting a 24 percent drop in EBITDA due to weaker margins across business segments. The report also highlights a potential 20 percent decline in consolidated segment EBIT and a double-digit drop in adjusted profit after tax. Motilal Oswal Financial Services models a 14 percent revenue growth for the FMCG segment with flat margins, alongside a 10 percent EBIT growth in that sector. Meanwhile, Nuvama Equities expects consolidated revenue to fall 3 percent year-on-year, hurt by cigarette weakness and subdued agricultural operations, with FMCG and paper businesses providing partial cushion.

Cigarette Segment Pressures

For the cigarette business, HDFC Securities notes a 74 percent growth in gross revenue that leads to a 20 percent drop in net sales following tax hikes, alongside a 7 percent volume decline. The firm states that price hikes of 75 to 80 percent will help the company achieve EBIT and stick neutrality. Motilal Oswal Financial Services projects a 22 percent revenue decline and an 8 percent volume drop annually for cigarettes, expecting a 28 percent year-on-year decline in EBIT and a significant margin contraction due to insufficient price hikes. Nuvama Equities similarly forecasts an 8 percent drop in cigarette volumes and up to a 29 percent drop in operating profit following tax hikes.

Market Ratings and Share Performance

Motilal Oswal maintains a Neutral rating on ITC with a target price of 285 rupees per share. HDFC Securities gives an Add rating with a target price of 200 rupees per share. The stock has gained 3.27 percent over the past week, but has declined 15.67 percent in six months, 27 percent in 2026 so far, and about 36 percent over one year, with a market capitalisation of 3,32,847.60 crore rupees on Friday.

Context

Large consumer goods companies often experience fluctuating quarterly results when core segments face regulatory tax changes while non-core segments expand. Share prices in large-cap firms frequently react to brokerage earnings forecasts ahead of official financial disclosures.