ITC Q2: Standalone Profit Falls 20% to ₹4,137 Crore as Higher Cigarette Taxes Bite

Growth in non-cigarette FMCG, agri and paperboards did not offset the hit to the cigarette business.

ITC’s standalone net profit fell 20.1% year on year to ₹4,137.12 crore in the quarter ended September 30, 2026. Higher cigarette taxes and pressure on legal cigarette volumes weighed on its core business, even as the non-cigarette FMCG, agriculture and paperboards businesses grew. Financial Express and The Economic Times also reported the results.

Standalone and consolidated numbers

The two sets of figures are not interchangeable, so here they are separately.

• Standalone net profit: ₹4,137.12 crore, down 20.1%.
• Consolidated net profit attributable to owners: ₹4,168.40 crore, down 18.7%. Business Standard’s report puts total consolidated profit for the quarter at about ₹4,229 crore, down 18.45%, which is a different measure.
• Gross revenue: up 43.9% to ₹30,578.40 crore, from ₹21,255.86 crore a year earlier. Much of the jump reflects higher excise duty, which counts in gross revenue.
• Consolidated net revenue: up 3.9% to ₹20,269 crore.

The year-earlier comparison is on a consolidated basis: ITC’s Q2 FY26 gross revenue was ₹21,255.86 crore.

Cigarette taxes weigh on profit

Cigarette taxation rose from February 1, 2026, with GST on cigarettes raised to 40% of the retail sale price and higher excise duty after the GST compensation cess was phased out, according to the report. The higher taxes pushed manufacturers to raise prices, which affected demand and legal volumes.

ITC’s cigarette segment profit before interest and tax (PBIT) fell 27% year on year to ₹3,813.5 crore. The company has taken a calibrated approach to pricing to absorb the impact while limiting a shift towards illicit, tax-evaded products. The pressure had already shown in the previous quarter, when standalone net profit fell about 27%.

Non-cigarette FMCG keeps growing

Non-cigarette FMCG revenue rose 16% to ₹6,967.2 crore, and segment PBIT rose 28% to ₹558.3 crore. According to ITC, demand was strong across biscuits, snacks, noodles, spices, salt, frozen snacks, home care and notebooks, which grew more than 20%, while dairy and personal wash grew in the high teens. The company said this was its fastest FMCG revenue growth in 14 quarters.

Agri and paper add support

Agriculture revenue grew 12%, helped by value-added products and leaf tobacco exports. The paperboards, paper and packaging business improved on stronger demand and pricing actions. ITC is watching external pressures including geopolitical developments, high input costs, supply-chain disruption and uneven monsoon conditions.

The diversification test

The quarter shows two different stories: tax pressure on cigarettes and growth in packaged foods, personal care, agriculture and paperboards. How well ITC’s non-tobacco businesses keep growing, and how it handles higher cigarette taxes, input-cost inflation and shifting consumption, will be watched in the coming quarters.

This article is for information only and is not investment advice. Sources: Financial Express, Business Standard, The Economic Times, Kotak Neo.