ITC shares rise up to 1.5% as Q2 results beat estimates on rising cigarette volumes

ITC shares rise up to 1.5% as Q2 results beat estimates on rising cigarette volumes

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26 Aug, 2025 12:21

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Consumer goods major ITC shares rose 1.5% to Rs 424 apiece to hit their highest level since September 4 as the firm's September quarter results beat estimates on rising cigarette volumes.

The firm beat brokerage estimates with 5.4% rise in standalone net profit on annual basis and revenue increased 7.1%.

Nomura said company's performance in fast moving consumer goods sector is better than peers and sees paperboard sales to recover in H2FY26.

Global brokerage Jefferies said cigarette volumes are better than peers, adding FMCG segment has beat estimates. It gave a 'buy' call and raised the target price to Rs 535 per share.

"Cigarette volume is up 6% YoY and margins are weaker on costly tobacco. FMCG growth improved but margins are soft. EBITDA growth muted at 2%, outlook positive," said Jefferies.

On October 31, ITC shares on NSE closed 0.3% higher at Rs 420 apiece.

Macquarie expects cigarette margin pressure to ease in H2. The brokerage highlighted company's continued strength in cigarette volume and recovery in paper business.

Citi also gave a 'buy' call and a target price of Rs 500 per share.

"Cigarette growth is up 7%, the category is expanding in stable tax setup," said Citi.

So far in 2025, ITC shares fell 8%.

Diversified entity ITC Ltd on Thursday reported a 2.61% increase in consolidated profit to Rs 5,186.55 crore during the September quarter even as FMCG categories faced short-term disruption following the implementation of net GST slabs and excessive rains in parts of the country.

The Kolkata-headquartered company had posted a consolidated profit of Rs 5,054.43 crore in the year-ago period.

Hover ITC's revenue from sales of products was down 1.6% to Rs 21,047.45 crore in the September quarter. It was Rs 21,387.15 crore in the corresponding quarter of the previous fiscal year.

"Excessive rains in many parts of the country and transition to new GST rates posed operational challenges, especially for the FMCG categories, causing short-term business disruptions during the quarter," said ITC in its earnings statement.

Revenue from the operations of ITC was also down at Rs 21,255.86 crore, while total expenses were at Rs 15,016.02 crore, down 2.58%, in the quarter.

Total income of ITC, which includes other income, during the quarter, was at Rs 21,840.26 crore, up 1.38%.

Commenting on the overall trend, ITC said high-frequency indicators for the quarter suggest mixed trends.

"While rural demand continued to demonstrate resilience, urban consumption witnessed an uptick. On the other hand, industrial growth, core sector growth, automobile sales, credit growth and electricity & fuel consumption remained relatively subdued," ITC said.

ITC's revenue from total FMCG business, which includes cigarettes, was up 7% at Rs 5,473.46 crore.

ITC's revenue from 'cigarettes' was at Rs 9,414.34 crore, up 6% in the second quarter of the ongoing fiscal year.

"Strategic portfolio and market interventions with focus on competitive belts and to counter illicit trade, drive volume-led growth and reinforce market standing," it said.

Moreover, differentiated variants and the premium segment registered a strong growth in the cigarette segment.

ITC's revenue from the 'FMCG Others' segment was Rs 6,059.12 crore, up 8.48%.

FMCG other business includes branded packaged foods businesses in staples, meals, snacks, dairy & beverages, biscuits & cakes, chocolates, coffee & confectionery, education and stationery products, personal care products, safety matches and agarbattis.

According to ITC, the "businesses continued to mitigate the impact through focused cost management initiatives, portfolio premiumisation and calibrated pricing actions".

However, its revenue from the agri business was down 31% to Rs 4,037.8 crore. This was impacted by "timing difference (of crops)and high base effect".

ITC's revenue from paperboards, paper & packaging was at Rs 2,220.32 crore, up 5%.

Its revenue from 'others', which include IT services, ITC Grand Central Hotel, Mumbai and FoodTech, was Rs 1,244.62 crore, up 20.6%.

Meanwhile, in a separate filing, ITC on Thursday informed its board in a meeting on Thursday, that it has recommended the appointment of Amitabh Kant as a Director and an Independent Director.

It has also confirmed the re-appointment of Hemant Mallik as the director of the company for two years. Mallik, who heads the food division of ITC, tenure would be effective from August 12, 2026.

On the outlook, it said, "Lower inflation, reduction in interest rates & liquidity support by the RBI, income tax cuts announced in the recent Union Budget along with front loading of government expenditure, and the recent reduction in GST rates across a wide range of products are expected to progressively bolster consumption." Shares of ITC Ltd on Thursday settled at Rs 418.70, down 0.69% from the previous close.