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Business & Stocks Economic Times Markets • Nov 01, 2026

ITC Q2 FY26 Earnings Preview: Profit Seen Falling Nearly 30% YoY as Cigarette Tax Hikes Bite

💡 Key Takeaways

•Consolidated revenue is projected to fall by 3% YoY for Q2 FY2026-27.
•Cigarette volumes are estimated to contract by 8% due to tax hikes.
•Cigarette operating profit could drop by up to 29% YoY, offset partially by FMCG growth.

NEW DELHI [NCRBuzz Wire] — ### Financial Metrics & Earnings Outlook

**NEW DELHI [NCRBuzz Wire] — Market analysts tracking ITC Limited's Q2 FY2026-27 earnings preview projections indicate a severe contraction in core profitability due to stringent fiscal policies.** Brokerage firm Nuvama has estimated an overall 3% year-on-year (YoY) decline in consolidated revenue alongside a sharp 20% drop in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).

**The primary driver behind this downturn is an anticipated 8% volume contraction in the company's core cigarette segment.** Furthermore, cigarette operating profit is projected to plummet by up to 29% YoY, directly resulting from recent excise and tax hikes implemented to curb tobacco consumption and boost state exchequer revenues. Concurrently, shares closed at ₹265.60 on Friday, marking a 27% decline over the course of 2026.

### Segment Performance & Offsetting Factors

**Diversified business segments including Fast Moving Consumer Goods (FMCG) and paperboards are expected to partially cushion the bottom-line blow.** While the tobacco business faces intense margin pressures, steady volume growth in packaged foods, personal care, and stable demand in paper divisions will act as defensive buffers during the quarter.

### Financial Metrics Overview

|---|---|---|---|

### What Lies Ahead for Investors

**Market participants should closely monitor management commentary regarding volume recovery timelines and pricing strategies.** The ability of the non-cigarette segments to sustain higher margins will remain critical for long-term valuation recovery on the stock exchanges.

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🏛️ Background Context

ITC operates in a highly regulated and heavily taxed sector where excise duty and GST revisions directly impact consumer pricing and demand elasticity. Historically, tax hikes on tobacco products have driven temporary volume contractions followed by gradual normalization as pricing adjustments settle.

💡 Citizen & Commuter Quick Explainer (FAQ)

Q1: What is the projected revenue drop for ITC in Q2 FY26?

Brokerages project a 3% year-on-year decline in consolidated revenue.

Q2: What is causing the contraction in cigarette operating profit?

Recent excise and tax hikes implemented to curb tobacco consumption have driven an estimated 8% volume drop and up to a 29% plunge in operating profit.

Q3: Which segments are expected to offset the tobacco business losses?

Steady growth in Fast Moving Consumer Goods (FMCG) and paperboard segments is expected to provide partial cushioning.

Verified Wires: Economic Times Markets, Nuvama Institutional Equities, Livemint Markets & Economy, Business Standard, Google News Business Original Wire Dispatch ↗

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