ITC Q4 results review: Shares of ITC declined 1.5% on Friday after the FMCG major reported a sharp decline in consolidated net profit for the March quarter of FY26, primarily due to a high base effect arising from a one-time gain recorded in the previous year following the demerger of its hotels business. The board of directors of the company recommended a final dividend of ₹8 per equity share for FY26.
The stock fell as much as 1.5% to its day’s low of ₹303.30 per share on BSE.
ITC Q4 Results
The company posted a ₹5,469.74 crore”>consolidated net profit of ₹5,469.74 crore for Q4FY26, marking a decline of 72.4% on a year-on-year basis compared with ₹19,807.88 crore reported in the corresponding quarter of the previous financial year.
The steep fall in reported profit was largely attributable to an exceptional gain of ₹15,179 crore booked in Q4FY25 after the demerger of the hotels business, which had significantly boosted earnings in the year-ago period.
Excluding exceptional items, consolidated profit from continuing operations increased 6% year-on-year and 9% sequentially to ₹5,469.74 crore. The company had reported profit from continuing operations of ₹5,155.27 crore in Q4FY25 and ₹5,018.45 crore in the December quarter of FY26.
ITC reported consolidated revenue from operations of ₹23,821.48 crore in Q4FY26, registering a growth of nearly 17% year-on-year and about 10% quarter-on-quarter. The company had posted revenue from operations of ₹20,376.36 crore in Q4FY25 and ₹21,706.64 crore in Q3FY26.
The company’s FMCG segment continued to deliver healthy growth during the quarter. Revenue from the segment rose 15% year-on-year to ₹6,303.73 crore during Q4FY26. The segment also witnessed margin expansion, with EBITDA margin improving by 200 basis points year-on-year to 11%.
However, ITC’s cigarettes business emerged as a key growth driver during the quarter, with segment revenue rising nearly 32% year-on-year to ₹11,066.02 crore.
The company said the cigarettes business maintained volume-led growth despite the increase in taxes on cigarettes that came into effect from February 1, 2026. According to the company, the segment delivered a strong performance till January 2026, aided by strategic portfolio actions and focused market interventions.
“The business continues to make strategic portfolio and market interventions, with focus on competitive belts and to counter illicit trade and reinforce market standing,” the company said.
For the full financial year FY26, consolidated profit declined 40% to ₹21,018.15 crore compared with ₹35,052.48 crore in FY25. Meanwhile, revenue from operations for the full year increased 10.2% to ₹89,913.33 crore from ₹81,612.78 crore in the previous financial year.
Dividend: Meanwhile, ITC fixed Wednesday, May 27, 2026, as the record date for determining shareholders eligible to receive the dividend. The company said the dividend payout would be completed between Friday, July 24, 2026, and Wednesday, July 29, 2026.
Including the interim dividend of ₹6.50 per share paid on February 27, 2026, the company’s total dividend for FY26 stood at ₹14.50 per share, slightly higher than the ₹14.35 per share dividend paid for FY25.
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Brokerages reviewing ITC’s Q4FY26 performance said the March quarter did not fully capture the actual demand trend in the cigarette business due to the steep tax hike implemented from February 2026, while the FMCG segment delivered stronger-than-expected growth.
JM Financial maintained its ‘Add’ rating on ITC and raised the target price to ₹325 from ₹300 earlier. The brokerage said the company’s cigarette business witnessed healthy volumes in January 2026, but the sharp tax increase from February negatively impacted demand thereafter.
“ITC’s Q4FY26 cigarette business saw healthy volumes in Jan’26, while the steep tax hike from Feb’26 was detrimental to volumes. Hence, in our view, it does not give a true picture of underlying trends and cannot be extrapolated,” JM Financial said. According to the brokerage, ITC has adopted staggered price hikes of more than 20% against the tax increase of nearly 35%-40% in order to protect market share and curb illicit trade.
The brokerage noted that ITC’s FMCG segment performance was better than expected, with like-to-like sales growth of 14% year-on-year and EBITDA growth of 39% year-on-year. It added that EBITDA margin expanded by 200 basis points to 11%. JM Financial further said the Agri and Paperboard businesses reported sales below estimates.
However, it cautioned that although valuations at nearly 20 times FY27 estimated earnings and 18 times FY28 estimated earnings were below long-term averages, the stock could remain under pressure until there is better clarity on cigarette volumes and EBIT impact.
Elara Securities also retained a positive stance on the stock with an ‘Accumulate’ rating and an unchanged target price of ₹335.
“In Q4FY26, ITC’s cigarette business witnessed a significant change in taxes and hence, Q4 is not a true reflection of the volume impact due to price hikes. We believe Q1FY27 should provide a clearer picture on the impact of price hikes on volumes,” Elara Securities said.
The brokerage observed that cigarette business net sales growth stood close to 10%, supported by strong volume offtake before the implementation of the revised tax structure. It added that EBIT growth in the cigarettes segment came in at 7% year-on-year.
Elara also highlighted that FMCG Others remained a key positive during the quarter, reporting revenue growth of 15% year-on-year and EBIT growth of 51% year-on-year. The brokerage also pointed to a recovery in the Paper segment, where profits increased 21% year-on-year.
The brokerage marginally reduced its earnings estimates for ITC by 1.7% for FY27 and 1.3% for FY28, while maintaining its sum-of-the-parts target price of ₹335. Elara said it continued valuing the cigarettes business at 15 times the March 2028 estimated price-to-earnings multiple and the FMCG business at 5.5 times FY28 estimated price-to-sales multiple.
Moreover, Elara noted that ITC currently offers a dividend yield of around 5%, which continues to support the stock’s investment appeal despite near-term uncertainty around cigarette volumes after the recent tax increase.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
