ITC shares in focus as Q2 net profit falls on cigarette taxes
The conglomerate reported a decline in consolidated net profit for the September quarter due to increased taxes and higher input costs.
ITC is expected to remain under investor scrutiny on Tuesday, November 3, after reporting weak financial results for the September quarter. According to reports from Mint and Business Standard, the company's consolidated net profit fell during the second quarter of FY27 as higher taxes on cigarettes and rising input costs impacted earnings.
The company reported a consolidated net profit of ₹4,229.33 crore, according to Mint, which was a decrease from ₹5,186.55 crore in the same quarter a year ago. Business Standard reported the profit at ₹4,168.40 crore, noting a year-on-year decline of 18.7 per cent.
The cigarette business faced pressure from tax increases that began on February 1, 2026. This included the Goods and Services Tax (GST) rising from 28 per cent of the transaction value to 40 per cent of the retail sale price, alongside a sharp rise in excise duty. ITC stated that these unprecedented tax hikes affected legal industry volumes and increased the risk of consumers moving to illicit products.
While the cigarette segment saw a decline in operating profit, other divisions showed growth. The FMCG business saw revenue rise by 19 per cent, led by products such as biscuits, snacks, and noodles. The paperboards and packaging segment also reported a recovery, with revenue increasing by 36 per cent year-on-year.
The agri business recorded 12 per cent revenue growth, though performance was affected by West Asia-related disruptions and delayed customer orders. Meanwhile, the food-tech business saw its gross merchandise value grow by 53 per cent.