Motilal Oswal keeps ITC Neutral at Rs 300 after cigarette earnings miss

ITC’s Q1 FY27 consolidated cigarette revenue fell 22% year-on-year to Rs 10,410 crore, while cigarette EBIT declined 32% to Rs 3,770 crore. Motilal Oswal cited tax pressure, measured price hikes and high-single-digit volume decline despite resilient FMCG and paper growth.

— Source publishedMon, 3 Aug, 2026, 07:25 IST·First seen Mon, 3 Aug, 2026, 08:00 IST·Source NDTV Profit

What happened

ITC Limited · Motilal Oswal retained its Neutral rating and Rs 300 target on ITC after Q1 FY27 cigarette revenue and EBIT missed estimates. Tax pressures,

Key facts

  • Neutral rating
  • Rs 300 target price
  • 22% YoY decline in consolidated cigarette revenue
  • Rs 10,410 crore consolidated cigarette revenue
  • 18% revenue-decline estimate
  • High-single-digit cigarette volume decline
  • 32% YoY decline in consolidated EBIT to Rs 3,770 crore
  • Rs 4,110 crore consolidated EBIT estimate
  • 35% YoY decline in standalone EBIT

Why this matters

ITC’s earnings reinforce the strategic value of reducing cigarette concentration through scalable FMCG adjacencies and selective paper-related growth opportunities.

What to watch

  • Sequential cigarette volume trend and whether high-single-digit declines moderate.
  • Cigarette net realization growth versus tax increases and gross-price hikes.
  • Cigarette EBIT margin and the gap between EBIT decline and revenue decline.
  • Evidence of illicit-trade growth, downtrading or market-share loss in key states.
  • Management commentary on further pricing actions, tax policy and volume recovery timing.
  • FMCG margin expansion and whether non-cigarette businesses can cushion consolidated profit growth.
  • Use staggered rather than broad-based cigarette price hikes to protect legal-market volumes.
  • Lean on premium cigarette formats, distribution execution and pack-price architecture to defend mix.
  • Accelerate FMCG, hotels, agri and paper growth messaging to offset investor concern over cigarette earnings concentration.
  • Tighten cigarette overheads and trade-spend allocation to limit operating deleverage.
  • Increase engagement with policymakers and industry bodies on tax stability and illicit-cigarette risks.