ITC Q4 FY26 Results (NSE: ITC)
Signal: Margin expansion
The read
ITC reported a solid Q4FY26, with consolidated revenue +16.9% YoY, OPM at 39% (+400bps YoY) — 6th consecutive quarter of margin expansion — and PAT +6.1% YoY to ₹5,470 Cr. The headline revenue growth is distorted by an excise duty accounting change (GST compensation cess replaced by excise) which inflated cigarette segment revenue by ~₹2,666 Cr in Q4 vs a year ago; adjusted for this, cigarette volume growth was modest. FMCG-Others continues to gain scale with EBITDA +36.9% YoY, though it remains investment-heavy. Full-year FY26 revenue ₹89,913 Cr (+10.2%) and PAT ₹21,018 Cr (+4.9%) reflect steady compounding. Net cash generation remains strong (operating cash flow ₹17,095 Cr) despite ₹17,968 Cr dividend payout. Key risk: structural pricing power in cigarettes is regulator-dependent; FMCG-Others profitability recovery is still in early stages.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹23,821.48 Cr | 16.9% | 9.8% |
| EBIT | ₹7,197.82 Cr | 5.3% | |
| Net profit | ₹5,469.74 Cr | 6.1% | |
| EPS | ₹4.3 | 6.2% | |
| EBIT margin | 39% |
P&L walk
Q4FY26 consolidated revenue ₹23,821 Cr, +16.9% YoY, driven by excise-duty pass-through in cigarettes and FMCG-Others growth; gross margin expanded sharply as raw material costs grew slower than revenue; EBITDA margin jumped 400bps YoY to 39% — 6th consecutive quarter of margin expansion on consolidation; PAT ₹5,470 Cr, +6.1% YoY, slightly lagging operating profit growth due to higher depreciation and tax.
Segments
Cigarettes segment drove the quarter: standalone revenue +31.8% YoY on excise duty pass-through, segment profit +7.2% YoY. FMCG-Others EBITDA grew 36.9% YoY to ₹671 Cr, though segment profit margin remains thin at 8.3% of segment revenue. Agri Business declined 15.7% in revenue and 29.6% in profit on lower leaf tobacco and commodity realisations. Paperboards, Paper & Packaging profit grew 21.2% YoY on stable revenue, indicating margin recovery.
Key positives
- Consolidated OPM expanded 400bps YoY to 39% — 6th consecutive quarter of margin expansion, driven by pricing power in cigarettes and scale benefits in FMCG-Others.
- FMCG-Others segment EBITDA grew 36.9% YoY to ₹671 Cr, indicating improving profitability in branded foods and personal care businesses.
- Cigarettes segment profit grew 7.2% YoY despite regulatory headwinds, demonstrating pricing power.
- Strong cash generation: operating cash flow ₹17,095 Cr in FY26, fully covering capex of ₹2,069 Cr and dividend of ₹17,968 Cr.
- Total dividend for FY26 raised to ₹14.50/share (+1.0% YoY), implying ~5% dividend yield at current price.
Key concerns
- Revenue growth significantly boosted by excise duty accounting change: standalone excise duty jumped 353% YoY to ₹5,644 Cr, inflating cigarette segment revenue by ~₹2,666 Cr — adjusted cigarette volume growth was likely flat to negative.
- FMCG-Others segment profit margin remains thin at 8.3% of segment revenue, despite 5 years of heavy brand investment; profitability recovery is still in early stages.
- Agri Business revenue declined 15.7% YoY and profit declined 29.6% YoY, indicating headwinds in commodity trading.
- Consolidated PAT growth (+6.1%) lagged revenue growth (+16.9%) as margins improved but depreciation, finance costs, and higher tax absorbed gains.
- FY26 PAT growth of 4.9% trails 3-year profit CAGR of -39.58% (base effect from discontinued operations in FY25), indicating underlying earnings momentum is moderate.
Research and educational content only. Not investment advice.