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ITC Q4FY26 – FMCG performed well; Paperboard, paper & packaging witnessed margin improvement

ICICIdirect Research 22 May 2026 DISCLAIMER

ITC Q4FY26 standalone results are not exactly comparable on YoY basis because of significant changes in the taxation structure for cigarettes w.e.f. 1 February 2026, Gross Revenue and Excise Duties, for the quarter and full fiscal.
ITC gross revenues grew by 17% YoY to Rs21,695cr largely on account of 32% in the cigarette business, while FMCG business grew by 15% during the quarter.
ITC’s cigarette business volume growth slightly moderated to 4-5% in Q4FY26 (as per our calculations) from 6-7% in earlier quarters.
EBIDTA margins improved by 533bps YoY to 40%. FMCG business EBIDTA margins improved by 200bps to 11%, while Paperboard, paper & packaging (PPP) business witnessed 176bps expansion. Adjusted PAT grew by 5% YoY to Rs5,111.3cr.
Near term outlook: The company has already taken 50-60% of the required price hike (of 30-35%) in its portfolio and will take remaining price hike on calibrated manners without putting much stress on the sales volume of the cigarette business. We expect cigarette sales volume will be under pressure and would decline in H1FY27 and would gradually stabilise from Q3FY27. We have factored in volume decline of 8% and 2% for FY27E and FY28E respectively in our estimates. On the other hand, volatile commodity prices will keep FMCG business margins under check in H1FY27. Overall, we expect H1FY27 performance to be subdued for ITC and might improve from H2FY27 depending on market environment.
View: Though valuations are attractive post recent correction, we will maintain our wait and watch stance on ITC to assess the impact of price hike on cigarette business in the near term. The stock is currently trading at 18x/16x its FY27E/FY28E EPS. We maintain our Hold recommendation on the stock with a price target of Rs335.

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