ITC reported a sharp fall in consolidated net profit for the first quarter of FY27, even as its revenue jumped nearly 28 percent year-on-year. The company’s results show a clear gap between topline growth and profitability.
ITC’s consolidated net profit fell 15.61 percent year-on-year to Rs 4,508.79 crore in Q1 FY27. The company had reported a profit of Rs 5,343.41 crore in the same quarter last year. On the other hand, revenue from operations rose 27.83 percent to Rs 29,409.82 crore from Rs 23,007.49 crore in Q1 FY26.
Why did ITC’s profit fall despite higher revenue?
One of the reasons for the decrease in profit was the steep increase in costs. The overall costs incurred by ITC increased by 48.09% to Rs 24,809.95 crore during the June quarter when compared to the previous year. The growth in costs was much higher than that in income.
The company also flagged changes in the tax structure for cigarettes. ITC said its gross revenue from the sale of products and services and excise duty for the June quarter are not strictly comparable with the previous year. This is because the GST Compensation Cess expired and GST and Central Excise duty on cigarettes were increased from February 1, 2026.
Cigarettes remain the biggest contributor to ITC’s business. Revenue from the cigarette segment stood at Rs 16,596.67 crore in Q1 FY27. The segment reported a result of Rs 3,769.11 crore during the quarter. However, the apparent jump in cigarette revenue needs to be viewed carefully because of the changes in taxation.
ITC has also been cautious about passing on the full impact of higher taxes to consumers. Chairman Sanjiv Puri had earlier said the company would take calibrated pricing actions. The strategy is aimed at protecting its legal cigarette business while limiting the risk of consumers shifting towards cheaper or illicit alternatives.
ITC’s other businesses deliver a mixed performance
The company also reported an exceptional gain of Rs 405.88 crore during the quarter. This came from the remeasurement of ITC’s existing interest in Sproutlife Foods after the company became a subsidiary from April 1, 2026. The gain provided some support to the quarterly numbers, but it was not enough to prevent a year-on-year decline in consolidated profit.
ITC’s other businesses delivered a mixed performance. The FMCG-Others segment reported revenue of Rs 6,687.90 crore and a segment result of Rs 484.97 crore. The Agri Business segment recorded revenue of Rs 8,082.06 crore, while its segment result stood at Rs 353.79 crore.
Paperboards, Paper and Packaging reported revenue of Rs 2,307.24 crore and a segment result of Rs 224.22 crore. The hotels business also continued to contribute to the group’s overall performance.
Overall, ITC’s Q1 FY27 results present a mixed picture. Revenue growth remained strong, but higher expenses weighed on profitability. The impact of the new cigarette tax structure also remains an important factor for the company.
Going ahead, cigarette volumes, pricing and margins will be key areas to watch. The performance of ITC’s non-cigarette FMCG business will also matter as the company looks to maintain growth beyond its traditional cigarette business.
(Disclaimer: This article is for informational purposes only and should not be considered investment advice. The views, opinions, and recommendations expressed herein are those of the respective experts. Readers are advised to consult a qualified financial advisor before making any investment decisions.)
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