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Informist, Monday, Jan. 26, 2026

 

By Narayana Krishna

 

HYDERABAD – ITC Ltd.'s December quarter earnings are expected to grow steadily, led by resilient cigarette sales volume, sustained momentum in the fast-moving consumer goods business, and a strong performance in the agri-business segment. Analysts expect cigarette volumes to see a modest rise, supporting revenue growth even as price hikes remain limited.

 

The country's largest cigarette company is expected to report an over 5% on-year increase in net profit for the December quarter to nearly INR 51.5 billion. The company's revenue is expected to rise over 8% on year to INR 185 billion, according to the average of estimates from 12 brokerages. On a trailing basis, the net profit is likely to increase a little over 1%, while revenue is expected to rise nearly 3%, the estimates show. The cigarettes-to-soaps major will announce its December quarter results Thursday.

 

Analysts project ITC's December quarter FMCG business, especially the foods segment, to benefit from stable raw material costs, an improved product mix, and better cost control, which is expected to drive margin expansion. The agri-business segment is also expected to post healthy growth on the back of strong sourcing and trading activity. However, the continued use of high-cost leaf tobacco and other inputs is likely to weigh on margins of the cigarette business and will partly offset operating gains even as overall net profit and earnings growth remain supported by the performance of its varied businesses, analysts said.

 

The highest estimate for the company's net profit is nearly INR 53 billion from Yes Securities (India) Ltd., while the lowest estimate of over INR 50 billion is from Nomura Equity Research. The highest revenue estimate is by Motilal Oswal Financial Services Ltd. at INR 207 billion, and the lowest is by Emkay Global Financial Services Ltd. at nearly INR 178 billion.

 

VOLUME PUSH

Most brokerages expect ITC to maintain 5-7% volume growth in the cigarette business during the December quarter. Cigarettes account for nearly 75% of ITC's annual profits and around 45% of its overall sales.

 

Analysts' estimates for ITC's December quarter revenue growth are in the 6–8% range. Most analysts attribute the growth primarily to steady expansion in the cigarettes business, coupled with growth in other segments.

 

YES Securities expects ITC to deliver steady December-quarter growth, led by a strong performance of the cigarettes business. The brokerage pegs overall topline growth at 6.8% on year, driven by a 7% on-year volume growth in cigarettes, indicating resilient demand despite a high base. It also expects the agri-business to grow 5%, while FMCG and paper businesses are seen growing 8% and 6% on year, respectively. Nomura also expects cigarette volumes to hold up in the mid-single-digit range during the December quarter, despite a strong base in the previous year.

 

Motilal Oswal expects stable growth across ITC's key operating segments, supported by steady cigarette demand and strong non-cigarette businesses. The brokerage projected 6% volume growth and 7% revenue growth in the cigarette business. Motilal Oswal is positive on the FMCG segment, projecting 9% revenue growth, while the agri-business segment is expected to outperform with 20% revenue growth. The paper segment is seen growing 7% on year.

 

Elara Securities also expects a stable December quarter for ITC and forecasts 7-8% on-year revenue growth, led by around 5.0–5.7% volume growth in the cigarette business. The brokerage believes cigarette demand remains resilient while other segments continue to contribute steadily. Elara's estimates broadly align with the Street's expectation of mid-single-digit volume-led growth in cigarettes anchoring overall performance.

 

Among other brokerages, Nirmal Bang expects ITC's topline to grow by about 8.5% on year, with cigarette sales rising 6% on year.

 

MARGIN PRESSURE

Analysts expect ITC's December quarter earnings before interest, tax, depreciation, and amortisation margin to remain range-bound, with some pressure as higher input costs in the cigarettes business offset improvements in the non-cigarette segments.

 

YES Securities holds a relatively optimistic view, projecting an EBITDA margin improvement of about 86 basis points on year to 35%, supported by operating leverage and margin gains in FMCG and agri-businesses. Motilal Oswal estimates EBITDA margin at 32.7%, lower than last year, citing pressure from elevated leaf tobacco costs, even as strong FMCG profitability offers partial support.

 

Some brokerages remain cautious on ITC's outlook for the margin. Nomura expects EBITDA margin at 32.3%, warning that continued consumption of high-priced leaf tobacco will keep margins under pressure over the next few quarters. Nirmal Bang forecasts EBITDA margin at 33.5%, down 70 basis points on year and 120 basis points on a trailing basis, reflecting margin compression in cigarettes despite stable performance in other segments.

 

Overall, analysts peg ITC's EBITDA margin for the December quarter largely in the 32–35% range. ITC's December quarter EBITDA is projected at INR 62.5 billion, according to the average of estimates from 12 brokerages.

 

Of the 13 research reports on the company available with Informist, seven have a 'buy' or equivalent recommendation on the stock with an average target price of INR 462. This is nearly 30% lower than the current market price. Four brokerages have a 'hold' call on the stock with a target price of INR 394 and two have a 'sell' recommendation with an average price target of INR 349. 

 

The stock has fallen nearly 22% since the announcement of its September quarter earnings. At 1100 IST, the company's shares were trading 0.7% lower at INR 321.20 on the National Stock Exchange.

 

Following are the Oct-Dec earnings estimates for ITC Ltd. based on reports from 12 brokerage firms in the descending order by the estimate of net profit in INR billion:

Brokerage name	Net Sales	Net Profit	EBITDA
YES Securities (India) Ltd	182.11	52.80	63.81
JM Financial Institutional Securities Pvt Ltd	195.72	52.62	62.54
Prabhudas Lilladher Pvt Ltd	179.06	52.04	62.85
Emkay Global Financial Services Ltd	177.87	52.04	62.22
Motilal Oswal Financial Services Ltd	207.07	51.74	67.78
Sharekhan Ltd	182.01	51.33	--
Nirmal Bang Equities Pvt Ltd	185.06	51.31	62.00
Kotak Securities Ltd	184.63	51.26	62.18
Elara Securities (India) Pvt Ltd	182.55	51.10	62.48
Systematix Shares and Stocks (India) Ltd	181.82	50.93	61.09
Nuvama Wealth Management Ltd	180.64	50.75	62.32
Nomura Equity Research	181.59	50.13	58.73
Average	185.01	51.50	62.54

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Deepshikha Bhardwaj

 

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