Key Business Metrics: Q3 20261
– New reporting structure: Standalone (core businesses) vs. Consolidated (including ITC Infotech India Limited, Surya Nepal Private Limited and ITC Hotels Limited) – bei: before exceptional items
– Gross Revenue up +7.1%, driven by double-digit revenue growth in FMCG and sustained momentum in cigarettes business
– Overall EBITDA up +8.8% consolidated, up +7.6% standalone basis (+8.3% ex-paper); EBITDA margin up 50bps to 35.1%
– Profit after tax: up +9.9% consolidated, up +6.8% standalone basis (before exceptional items)
– Q3 2026 EPS (consolidated): ₹3.94 (up +4%)
Q3 2026 Segment Highlights
Cigarette Segment:
– 42.5% weight in gross revenue, 82.8% weight in operating profit in Q3 2026
– Net segment revenue and operating profit are up +8% (net of Excise Duty/NCCD on sales: +7.9%) and +5.1%, respectively
– Strong growth sustained in differentiated and premium offerings. Strategic portfolio and market interventions with focus on competitive belts to counter illicit trade and reinforce market standing. Leaf tobacco cost remains elevated; moderation in leaf tobacco procurement prices witnessed in current crop cycle
Attention: Q3 2026 results are not impacted by the new excise duty to be levied from February 1, 2026
– Unprecedented increase in cigarette taxes effetive February 1, 2026: Punitive taxes on the legal cigarette industry have resulted in rapid growth of illicit cigarette trade, making India the 4th largest illicit cigarette market globally. It is estimated that illicit cigarette trade causes a loss of Rs.23,000 cr. p.a. ($2.5 billion) to the Exchequer and accounting for about 1/3rd of the legal industry
– Stability in taxes on cigarettes along with deterrent actions by enforcement agencies in recent years checked the growth of illicit industry and enabled volume recovery for the legal cigarette industry
– The changes in GST and Excise Duty rates announced recently, have led to an unprecedented increase in tax incidence on cigarettes. Such a steep increase will provide further impetus to illicit trade. ITC continues to engage with policymakers for a framework of pragmatic, equitable, non-discriminatory, evidence-based regulations and taxation policies that balance the economic imperatives and tobacco control objectives.
Other Segments:
– FMCG (revenue is up +11.1%, operating profit is up +42%): Double-digit revenue growth coupled with EBITDA margin expansion (up +145bps yoy). Broad-based growth across categories. Strong performance continues in premium portfolio and NewGen channels; Digital-first & Organic portfolio sustains its high growth trajectory (up +60% yoy). Signs of recovery in Notebooks amidst continued low-priced paper imports and opportunistic play by local/regional players
– Agri Business segment (revenue is up +6.3%, operating profit is up +2.8%): Robust growth in Value-Added Agri Portfolio (VAAP) driven by Aqua & Coffee. Strong growth in Leaf Tobacco exports. Continued strategic sourcing support to Branded Packaged Foods & Cigarettes Businesses
– Paperboard, Paper & Packaging (revenue is up +2.7%, operating profit is down -3.7%): Underlying performance improves. Industry remains impacted by low-priced imports, subdued realisations and increased wood prices. ITC accelerates plantations, develops new areas and engages in satellite-based monitoring. Robust growth in Packaging & Printing Business driven by Cartons & Flexibles segments
Summary:
ITC’s business fundamentals remain solid, supported by a recovery in overall FMCG demand and robust growth in its core cigarette segment. In addition, certain external headwinds appear to be easing. However, the sharp increase in cigarette excise duties effective February 1 represents a significant overhang for the stock, which has declined by c.20% since the announcement of the new tax regime.
References:
