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Informist, Thursday, Jul. 23, 2026

 

By Avishek Rakshit

 

KOLKATA – On its road to derisking its business primarily from cigarettes, which face heavy regulatory and tax pressures, ITC Ltd. is eyeing 80-100 basis points on-year growth in its earnings before interest, tax, depreciation, and amortisation margins from its non-cigarettes consumer goods portfolio. 

 

ITC, which is aspiring to become the country's largest consumer goods company, diversified into the non-cigarettes consumer goods business back in 2001 and since then have been coming up with new products and entering new product categories, but its profitability in the non-cigarettes consumer goods business has been lower compared with the core cigarettes business, sector analysts tracking the company said. A similar concern was raised by several shareholders at its 115th annual general meeting Thursday. 

 

"We had hit double-digit EBITDA (margins) a couple of years back and then there was a steep inflation so it dropped but in quarter four results you would have seen it we are back to 11 and now the commitment is to continue to expand by 80 to 100 basis points year-on-year remains; so we will we will strengthen that," Sanjiv Puri, chairman and managing director at ITC said responding to questions from shareholders at the AGM. 

 

Puri said that back in 2017, when ITC unveiled its strategy – ITC Next, a comprehensive corporate vision to build a future-ready, competitive, and climate-positive enterprise, the non-cigarette business, which majorly comprises consumer goods products, accounted for 17%-18% of the bottom line. 

 

"Prior to the hotel demerger, the share of non-cigarettes in the bottom line of the company rose up to 25%... mind you, during that period the bottom line of ITC moved from 10,000 crores to 20,000 (INR 100 billion to INR 200 billion)," Puri said. "That shows how the other sectors have been progressing and they've been progressing at a faster rate and that's where we are making large investments."

 

Referring to sector analysts' commentaries on the company's valuation, Puri said 40% of ITC's valuation emanated from the company's new businesses. 

 

"Please remember that in a short span of time we have created a portfolio with a consumer spend of 37,000 crores (INR 370 billion) and there are categories there that are sizable," he said. 

 

The top company official said ITC has product categories ranging from large to small and it is incubating some categories as well. Puri reasoned that gestation costs arising from these categories make the company's EBITDA margins from the non-cigarettes consumer business look lower than the potential in the consumer goods industry. 

 

However, as the company continues to scale up its older businesses, which helps it gain higher economies of scale, EBITDA margins will improve. Premiumising the portfolio, making structural investments, using digital technology, and optimising back-end operations will also aid EBITDA margins to grow. 

 

"So consistently our margins are improving and we believe they will continue to improve over time and the idea is not merely to be number one FMCG only in terms of size. We want to be there in all the financial metrics, but very importantly in terms of serving the customer by having the best quality products and creating value for all the stakeholders in our ecosystem," he said. 

 

Puri said consumer demand conditions are improving across urban and rural India after the government cut goods and services tax rates on several consumer goods products and several other measures. "However, the key monitorable, of course, is the consequence of the West Asia crisis, the impact on inflation and El Nio, which has the potential to cause some inflation and possibly rural distress," he cautioned. 

 

Thursday, ITC's shares ended at INR 281.30 on the National Stock Exchange, up 0.2% from the previous close. End

 

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

 

Edited by Saji George Titus

 

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