Owing to a steep tax hike earlier this year, ITC Limited reported 27% fall in standalone net profit at Rs 3,579 crore for the quarter ended June, 2026 (Q1FY27) as against a net profit of Rs 5,113 crore in the same quarter last year (Q1FY26). The conglomerate's revenue from operations rose 28% to Rs 26,943 crore in the reported quarter from Rs 21,694 crore in the year ago period.
The Kolkata headquartered company said that the first quarter was marked by heightened uncertainty in the operating environment due to the ongoing conflict in West Asia, which triggered a sharp increase & volatility in the price of crude oil & crude-linked products along with significant trade & supply chain disruptions.
ITC’s results, however, show that much of the drop in the bottom line came from the cigarette business where profit declined 35% to Rs 3,341 crore in Q1FY27 from Rs 5,145 crore in Q1FY26. The segment's gross revenue surged 80.6% YoY to Rs 15,383.55 crore.
India's cigarette industry is bracing for one of its toughest years, with leading manufacturers already warning that an unprecedented tax hike, rising illicit trade, intense price competition and pressure on margins could weigh on growth in FY27.
The concerns, flagged in the latest annual reports and earnings presentations of ITC, VST Industries and Godfrey Phillips India, come after the government sharply increased the tax incidence on cigarettes from February 1, 2026, by raising GST and excise duty. Cigarettes attract a flat 40% GST (against earlier 28%) combined with an additional excise duty ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks, plus a National Calamity Contingent Duty (NCCD).
ITC stated that staggered and agile pricing actions are underway to protect the consumer franchise and multiple interventions have been implemented within a short span of time towards re-architecting & fortifying the portfolio.
ITC’s FMCG - Others delivered a 12% rise in segment revenue in Q1 with Dairy, Snacks, Noodles, Frozen Snacks and Personal Care products driving growth. Inflationary pressures arising from the West Asia conflict impacted prices of fuel, edible oil, soap noodles and packaging inputs. This was partially cushioned by strategic inventory covers and commodity hedges, said the company.
“While consumption demand, both in rural and urban markets, remained resilient during the quarter, imported inflation is a key watch-out in the near-term. India is currently experiencing a significant deficit in monsoon and lower Kharif sowing levels compared to the same period last year,” said ITC in a statement.
