ITC standalone Q2 FY27 profit falls 20.1% on cigarette decline

ITC reported standalone profit after tax of Rs 4,137 crore in Q2 FY27, down 20.1% year on year, after cigarette segment result fell 27.2% to Rs 3,813 crore. FMCG Others, agri and paperboards, paper and packaging increased their segment results, but their combined gains did not offset the decline in cigarette profitability.

Why did ITC's standalone profit fall in Q2 FY27?

ITC's standalone profit fell because the decline in cigarette earnings was larger than the increase in segment results from its other businesses. Earnings before interest, tax, depreciation and amortisation, or EBITDA, declined 17.4% year on year to Rs 5,160 crore in Q2 FY27 from Rs 6,250 crore in Q2 FY26. Profit before tax, or PBT, before exceptional items fell 18.5% to Rs 5,507 crore.

Reported PBT decreased 19.9% to Rs 5,482 crore from Rs 6,847 crore, while profit after tax, or PAT, declined to Rs 4,137 crore from Rs 5,176 crore. Q2 FY27 included Rs 26 crore of expenses related to the acquisition of CPP, compared with an Rs 88 crore insurance-settlement receipt in Q2 FY26 for leaf tobacco stocks destroyed by fire at a third-party warehouse in an earlier year.

The difference between gross and net revenue was pronounced in Q2 FY27. Gross revenue rose 46.6% to Rs 28,152 crore, while net revenue increased 3.1% to Rs 18,449 crore. Segment revenue totalled Rs 30,072 crore, from which Rs 1,920 crore of inter-segment revenue was deducted to reach gross revenue from products and services.

Which ITC businesses grew outside cigarettes?

ITC reported 18% growth in non-cigarette segment revenue and 24% growth in non-cigarette segment results in Q2 FY27. FMCG Others revenue increased 15.7% to Rs 6,967 crore, agri business revenue grew 12.0% to Rs 4,452 crore, and paperboards, paper and packaging revenue rose 35.9% to Rs 3,016 crore.

Within FMCG Others, ITC reported growth above 20% in biscuits, snacks, noodles, spices, salt, frozen foods, homecare and notebooks. Personal wash and dairy recorded high-teens growth. The FMCG Others revenue increase was Rs 943 crore from Rs 6,024 crore in Q2 FY26 to Rs 6,967 crore in Q2 FY27.

ITC's agri business added Rs 476 crore of revenue from Q2 FY26, supported by value-added agri products and leaf tobacco exports, according to the presentation. Paperboards, paper and packaging added Rs 796 crore of revenue, while ITC cited 10% year-on-year growth in like-to-like segment revenue, excluding CPP, as well as export growth and pricing actions amid severe input-cost inflation.

How did ITC's segment profitability change?

ITC's cigarette segment result fell 27.2% year on year to Rs 3,813 crore in Q2 FY27 from Rs 5,241 crore, a reduction of Rs 1,428 crore. The presentation also reported a 21% year-on-year decline in cigarette net revenue, although the segment revenue table showed cigarette revenue rising 78.1% to Rs 15,536 crore.

FMCG Others segment result increased 27.8% to Rs 558 crore from Rs 437 crore, adding Rs 121 crore. ITC said FMCG Others segment profit before interest and tax, or PBIT, increased 28% and segment PBIT margin rose by 75 basis points, where one basis point is one-hundredth of a percentage point. The increase did not offset the Rs 1,306 crore decline in total FMCG segment result to Rs 4,372 crore.

Agri business segment result increased 11.2% to Rs 511 crore from Rs 459 crore in Q2 FY26. Paperboards, paper and packaging segment result rose 47.6% to Rs 282 crore from Rs 191 crore, an increase of Rs 91 crore. ITC also reported a 320-basis-point expansion in like-to-like paper segment PBIT margin and continued improvement in operational performance.

What did ITC report on operating trends and consolidated results?

ITC said its calibrated approach in cigarettes led to quarter-on-quarter improvement in performance, but the presentation did not provide quarter-on-quarter financial figures for the business. The cigarette segment result of Rs 3,813 crore in Q2 FY27 remained below Rs 5,241 crore in Q2 FY26 and was the principal movement behind the 18.4% fall in total segment results.

Finance cost rose to Rs 32 crore in Q2 FY27 from Rs 17 crore a year earlier. Other unallocable income, net of unallocable expenditure, was Rs 383 crore in Q2 FY27 against Rs 455 crore in Q2 FY26. The exceptional-item comparison also changed from an Rs 88 crore gain in Q2 FY26 to a Rs 26 crore expense in Q2 FY27.

At the consolidated level, ITC reported PAT of Rs 4,229 crore in Q2 FY27, down 18.5% from Rs 5,187 crore. Consolidated net revenue increased 5.1% to Rs 20,454 crore, while consolidated EBITDA fell 15.7% to Rs 5,645 crore. ITC identified ITC Infotech, SNPL, Sproutlife and ITCHL as group entities that delivered strong performance.

Conclusion

ITC's Q2 FY27 standalone results show that higher earnings in FMCG Others, agri and paperboards, paper and packaging were insufficient to absorb the cigarette segment's Rs 1,428 crore reduction in result. Non-cigarette segment results grew 24%, while total standalone PAT declined by Rs 1,039 crore year on year to Rs 4,137 crore.

The next disclosed matter to watch is whether ITC's stated calibrated cigarette approach produces the quarter-on-quarter improvement it cited, following the 21% year-on-year decline in cigarette net revenue in Q2 FY27. Further results can also show whether the 75-basis-point FMCG Others PBIT margin expansion and 320-basis-point like-to-like paper PBIT margin expansion continue alongside paper input-cost inflation and the CPP acquisition expense.