Highlight Points

• ITC shares up 0.89% today, outperforming Nifty 50 amid Q3 FY26 revenue growth of 7.1% YoY.
• During the latest quarter, FMCG-Others segment revenue increased 11% YoY; cigarette business up 7.9%, and EBITDA margin improves to 35.1%.
• Broker ratings mixed: PhillipCapital India issues Buy (₹380 target), Axis Capital recommends Reduce (₹325 target).

Shares of ITC Ltd (NSE:ITC) are outperforming the Nifty 50 today, trading at ₹321.45, up 0.89%, while the index slipped 0.51%. The movement likely to follow the company’s Q3 FY26 results and an interim dividend of ₹6.50 per share. Investors and brokers are evaluating the impact of ITC’s revenue growth across FMCG, cigarettes, agri, and paper segments, alongside recent changes in tax policies affecting the tobacco industry.

Q3 FY26 Financial Performance

ITC posted consolidated gross revenue of ₹7,1% YoY, driven by double-digit growth in FMCG-Others (+12.6%) and continued momentum in its cigarette business (+8.2%). Profit Before Tax (PBT) rose 8.8% YoY, while PAT increased 9.9% YoY. Standalone performance mirrored this trend, with gross revenue up 6.3%, EBITDA up 7.6% YoY (ex-paper up 8.3%), and PAT up 6.8% YoY. EBITDA margin improved to 35.1%, expanding 50 basis points compared to the previous year.

Segmental Growth Highlights

FMCG-Others: Revenue grew 11% YoY with EBITDA margins up 145 bps. Growth spanned staples, biscuits, noodles, dairy, premium personal wash, homecare, and agarbattis. The digital-first and organic portfolio surged 60% YoY, supporting broad-based performance.

Cigarette Business: Volume-led growth continued, with net revenue up 7.9% YoY, supported by differentiated and premium offerings. Legal industry volume recovery was aided by stable taxes and enforcement actions against illicit trade. However, upcoming tax hikes from February 1, 2026, could impact margins and create challenges for local farmers and retailers.

Agri and Paper: Agri business revenue increased 6.3% YoY, led by value-added products such as coffee, spices, and marine products. Paper segment underlying profits rose 11% YoY, despite higher wood prices and low-priced imports. Packaging and printing performance also improved, driven by flexibles and cartons.

Broker Sentiments Mixed

Broker reactions to ITC’s performance were varied:

• Centrum Broking: Neutral, target ₹355.
• Edelweiss Capital: Hold, target ₹365.
• Axis Capital: Reduce, target ₹325.
• PhillipCapital India: Buy, target ₹380.

This divergence reflects differing perspectives on the impact of upcoming cigarette tax hikes, FMCG growth sustainability, and challenges in paper imports.

Dividend and Investor Takeaways

The board declared an interim dividend of ₹6.50 per share for FY26, providing immediate returns for shareholders. Robust performance across FMCG-Others, tobacco, agri, and paper segments supports the company’s diversified revenue base, even as regulatory and taxation pressures remain a key focus area.

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