ITC cigarette revenue jumps 81% in June quarter; shares gain 4%
ITC’s cigarette revenue rose 81% year on year to Rs 15,383 crore in the June quarter, driving a rally in its shares. Consolidated profit, revenue and EBITDA declined, while Jefferies cited resilient volumes and upgraded its outlook, alongside tax and illicit-trade risks.
What happened
ITC Limited · ITC’s June-quarter cigarette revenue rose 81% to Rs 15,383 crore, prompting Jefferies to upgrade the stock on resilient volumes. Consolidated
Key facts
- ITC shares rose as much as 4.1% to Rs 292.55
- Cigarette revenue rose 81% year-on-year to Rs 15,383 crore in the June quarter
- Consolidated net profit fell 27.1% year-on-year to Rs 3,579 crore
- Net revenue declined 14.4% to Rs 16,908 crore
- EBITDA fell 27.9% to Rs 4,514 crore
- EBITDA margin contracted to 26.7% from 31.7%
- Total FMCG revenue rose 53% year-on-year to Rs 21,866 crore
- Jefferies target price: Rs 350
Why this matters
ITC’s cigarette strength highlights the strategic value of scaled, compliant tobacco distribution and premiumization assets, but any category deal thesis must account for regulatory and illicit-market exposure.
What to watch
- Union Budget or GST Council actions affecting tobacco taxes, compensation cess or duty structure.
- Management disclosure on underlying cigarette volume growth versus price/mix-led revenue growth.
- Evidence of illicit-cigarette penetration, including industry seizures, tax-collection trends and commentary from legal manufacturers.
- Sequential cigarette EBIT margin movement after leaf tobacco, packaging and tax costs.
- Rural consumption indicators and ITC FMCG-other sales growth, margin progression and new-product contribution.
- Whether consolidated profit and EBITDA decline reverses as non-cigarette divisions normalize.
- Prioritize calibrated cigarette price-pack architecture, especially low-unit-price packs and premium formats, to defend legal-market volumes without sacrificing mix.
- Increase anti-illicit-trade engagement with policymakers, emphasizing tax stability, enforcement and the fiscal leakage from counterfeit and smuggled products.
- Deploy cigarette cash flows into high-velocity FMCG categories, rural distribution, digital commerce and margin-accretive premium brands.
- Use strong segment profitability to sustain shareholder-return expectations while selectively investing in hotels, agri sourcing and supply-chain efficiencies.
- Brokerages are likely to revise FY27 cigarette assumptions upward if volume resilience persists for another two quarters, while maintaining a discount for regulatory risk.