ITC Ltd Profits Fall as Cigarette Taxes Rise

ITC Ltd reported a decline in net profit for the first quarter of fiscal year 2026-27, driven by a steep increase in cigarette taxes and trade disruptions caused by conflict in West Asia. The company's standalone net profit fell 27% to ₹3,578.82 crore, while consolidated net profit dropped 16.2% to ₹4,394.13 crore.

A primary driver of the slump was a February 1, 2026, tax overhaul that raised the goods and services tax on cigarettes from 28% of transaction value to 40% of the retail sale price. To counter volume losses to illicit trade, the company implemented roughly 30 interventions, including staggered price increases. Consolidated revenue from operations still grew 27.6% to ₹29,523.30 crore, supported by a 12% revenue increase in the non-cigarette FMCG segment, specifically in dairy, snacks, and noodles.

Operational pressures included a 16.55% revenue decline in the agri-business and increased total expenses reaching ₹22,829 crore. The company attributed supply chain volatility and higher input costs to the conflict in West Asia. Looking ahead, the firm warned that near-term growth and inflation could be further pressured by a significant monsoon deficit, lower Kharif sowing levels, and emerging El Nino conditions.