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Tax overhaul hit ITC's Q1 profit, down 16.2%
Cigarette tax overhaul drove ITC's Q1 net profit down 16.2% to Rs 4,394.13 crore, missing estimates. The non-cigarette FMCG segment posted 15.3% revenue growth.
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ITC's consolidated net profit fell 16.2 percent year-on-year to Rs 4,394.13 crore in the first quarter of fiscal 2026-27, the company reported Friday. A steep increase in cigarette taxes drove the decline. A year earlier, net profit stood at Rs 5,244.20 crore.
Consolidated net revenue dropped 11.1 percent to Rs 19,114 crore. Both figures missed Bloomberg consensus estimates of Rs 20,833.8 crore in revenue and Rs 4,852.2 crore in profit.
Sequentially, revenue rose 7.2 percent from Rs 17,825 crore in Q4FY26. Net profit fell 18.4 percent from the preceding quarter.
The tax structure for cigarettes changed on February 1, 2026. Goods and services tax rose from 28 percent of the transaction value to 40 percent of the retail sale price. Excise duty increased sharply after the compensation cess was phased out.
ITC's cigarette business took what the company called a "strategic and calibrated" approach to the tax increase. The company carried out more than 30 product interventions in a short period, reworking its portfolio across brand segments and price points. Staggered price increases helped limit the risk of consumers shifting to illicit trade, ITC said.
Pre-tax profit from the cigarette segment came in at Rs 3,769.11 crore, down 31.5 percent year-on-year. This was the first full quarter under the new tax regime.