Cigarette-to-soap conglomerate ITC on Monday reported an 18.7 per cent year-on-year (Y-o-Y) drop in consolidated net profit (attributable to the owners of the company) at ₹4,168.40 crore for the second quarter of financial year 2026-27 (Q2FY27), as a steep increase in taxes weighed on its cigarette business even as other segments posted strong growth. In the same period a year earlier, its net profit was at ₹5,126.11 crore.
Consolidated net revenues rose 3.9 per cent Y-o-Y to ₹20,269 crore. Both revenues and profit marginally exceeded the Bloomberg consensus estimates of ₹20,111 crore and ₹4,136 crore, respectively.
On a sequential basis, however, net revenues rose 6 per cent from ₹19,114 crore in Q1FY27, while net profit declined 5.1 per cent from the preceding quarter.
This is the second consecutive quarter in which higher cigarette taxes have weighed on ITC’s bottom line.
The tax increases, effective February 1, 2026, included a hike in the goods and services tax (GST) on cigarettes from 28 per cent of the transaction value to 40 per cent of retail sale price. Excise duty was also raised sharply following the phase-out of the compensation cess.
ITC said that the legal industry volumes remained under pressure due to unprecedented increase in tax. The company adopted a calibrated approach to mitigate the risk of a disproportionate shift in volumes to illicit trade while protecting its consumer franchise. It also undertook multiple interventions to re-architect its portfolio to reinforce market standing and fight global smuggled brands in the market, the company said.
The cigarette segment clocked pre-tax profit of ₹4,044.49 crore in Q2FY27, down 26 per cent Y-o-Y. On a sequential basis, however, pre-tax profit rose 7.3 per cent from ₹3,769.11 crore in the previous quarter.
The non-cigarette FMCG (fast-moving consumer goods) segment posted a 19.1 per cent Y-o-Y increase in revenue to ₹7,218.36 crore. The company said that the FMCG revenue growth was at a 14-quarter high as biscuits, snacks, noodles, spices, salt, frozen snacks, homecare, and notebooks led with over 20 per cent growth. This was supplemented by high-teens growth in dairy and personal wash. NewGen channels also saw “robust” growth, the company said, while there was a strong performance rebound in general trade.
Pre-tax profit in non-cigarettes FMCG stood at ₹576.69 crore in Q2FY27, up by 31.4 per cent Y-o-Y.
The overall agri business continued to be impacted by West Asia conflict and delayed call-offs by customers, the company said. However, new market development initiatives were stepped up to diversify into other geographies, while value-added products showed strong growth.
The agri business segment recorded a revenue of ₹4,550.60 crore in Q2FY27, up by 12.7 per cent Y-o-Y. Pre-tax profit stood at ₹518.41 crore, up by 14.3 per cent Y-o-Y.
The paper segment, ITC said, sustained “strong” recovery momentum, with improving demand scenario and pricing actions. The segment posted a revenue of ₹3,017.45 crore in Q2FY27, up by 35.9 per cent Y-o-Y. Pre-tax profit at ₹273.32 crore was up by 50.7 per cent.
The company also completed the acquisition of Century Pulp & Paper undertaking on August 1, 2026.
In its overall commentary, ITC said that the Indian economy continued to demonstrate strength, underpinned by resilient domestic demand across rural and urban markets.
However, deficient and uneven monsoons and lower reservoir levels, alongside strengthening El Niño conditions, pose risks to agricultural output and the inflation trajectory, it said.
ITC also added that geopolitical developments, climatic conditions, inflationary headwinds, and consumer sentiment would remain key monitorables.