ITC Q1 FY27 Results: Net Profit Falls 27% to ₹3,579 Crore as Higher Cigarette Taxes Hit Earnings

ITC Ltd. reported a 27% year-on-year decline in standalone net profit to ₹3,579 crore for the first quarter ended June 30, 2026, as higher taxes on cigarettes and rising operating expenses weighed on the company’s earnings. The cigarette business, which contributes a major share of ITC’s profit, was particularly affected by the higher tax burden.

ITC Q1 FY27 Profit Declines 27%

ITC’s standalone net profit fell 27% from the year-ago period to ₹3,579 crore in the April-June quarter. The decline came amid higher cigarette-related taxes and a substantial increase in expenses during the quarter.

The government had increased excise duty and other taxes on cigarettes earlier this year. According to Reuters, the new excise duty ranges from ₹2,050 to ₹8,500 per 1,000 sticks, in addition to a 40% consumption tax.

The higher levies affected ITC’s core cigarette business and put pressure on profitability despite the company’s efforts to offset part of the impact through staggered price increases.

ITC Revenue Rises 28% in June Quarter

Despite the decline in profit, ITC recorded strong growth in overall revenue. Revenue rose 28% to ₹26,943 crore during the quarter, compared with ₹21,070 crore in the corresponding period of the previous year, according to Reuters.

Growth in ITC’s non-cigarette consumer goods businesses also supported the company’s overall performance. Revenue from the non-cigarette consumer goods business increased 12% during the quarter.

Higher Expenses Weigh on ITC Earnings

ITC’s total expenses increased sharply during the quarter. Reuters reported that expenses rose 50% to ₹22,829 crore.

Higher input costs and increased operational expenses added further pressure to the company’s margins. The combination of increased taxes on cigarettes and higher costs resulted in a significant decline in quarterly profit.

Cigarette Business Takes Major Hit From Higher Taxes

The cigarette business remained the key pressure point for ITC during the quarter. Since cigarettes contribute a substantial share of the company’s profit, the increase in excise duty and other taxes had a disproportionate impact on overall earnings.

According to Reuters, ITC’s cigarette profit before finance costs, unallocated corporate expenses and taxes fell by about one-third during the quarter.

The company attempted to cushion the impact of higher taxes through staggered price increases. However, the pricing measures were not enough to fully offset the additional tax burden.

ITC’s Non-Cigarette Consumer Business Shows Growth

While cigarettes weighed on profitability, ITC’s non-cigarette consumer goods operations continued to expand. Revenue in this segment grew 12% during the first quarter.

The growth provided some support to the company’s overall revenue performance and helped ITC record a 28% increase in total revenue despite pressure on its core cigarette business.

ITC Share Price Falls After Q1 Results

ITC shares closed 1.4% lower at ₹281 on Friday, making the company one of the top 10 losers on India’s benchmark Nifty 50 index, according to Reuters.

The stock’s decline during the year had reached roughly 30% by the end of Friday’s trading session, according to the report.

ITC Q1 FY27 Results: Key Takeaways

ITC’s first-quarter performance highlighted the impact of higher cigarette taxation on its core business. While revenue recorded strong year-on-year growth, higher taxes, input costs and operating expenses weighed on profitability.

The quarter also showed the growing contribution of ITC’s non-cigarette consumer goods operations, which recorded 12% revenue growth. However, the cigarette business remains a major determinant of the company’s overall profit performance.

For investors and market watchers, the impact of the higher cigarette tax structure on volumes, pricing and margins will remain an important factor in assessing ITC’s future earnings performance.