ITC Q2 FY27 Results Analysis: Net Profit Falls 18.5%, FMCG Grows 19% as Cigarette Taxes Hit Earnings

ITC Limited reported an 18.5% year-on-year (YoY) decline in consolidated net profit to ₹4,229.33 crore in Q2 FY27, the quarter ended 30 September 2026. The results, announced on 2 November 2026, reflected significant pressure on cigarette profitability following increased taxation.

Although statutory revenue from operations grew 43.9% YoY to ₹30,578.40 crore, the company's presentation showed net revenue growth of only 5.1% to ₹20,454 crore. Consolidated EBITDA declined 15.7% to ₹5,645 crore. Meanwhile, FMCG-Others revenue increased 19.1%, and paperboards, paper and packaging revenue grew 35.9%.

The ITC Q2 FY27 Results highlight a growing difference between the performance of its cigarette and non-cigarette businesses. For investors, cigarette profitability, FMCG margins, acquisition-led growth and cash generation remain the key factors to monitor.

Table of Contents

1. ITC Q2 FY27 Results: Key Financial Highlights
2. Why Did ITC's Profit Fall in Q2 FY27?
3. ITC Q2 FY27 Segment-Wise Performance
4. ITC Standalone vs Consolidated Results
5. ITC Q2 FY27 QoQ and H1 Performance
6. ITC H1 FY27 Cash Flow and Balance Sheet
7. ITC Acquisitions and Business Developments
8. ITC Q2 FY27 Dividend and Share Price Reaction
9. ITC Valuation, Risks and Key Investor Indicators
10. Conclusion

ITC Q2 FY27 Results: Key Financial Highlights

ITC's September 2026 quarter showed modest growth in net revenue but a substantial decline in profitability. The divergence was mainly driven by higher cigarette taxation, while the company's diversified businesses continued to expand.

ITC Q2 FY27 Financial Results

The following table summarises ITC's key consolidated financial figures for the quarter ended 30 September 2026.

Financial Metric	Q2 FY27
Gross revenue	₹30,431.01 cr
Revenue from operations	₹30,578.40 cr
Net revenue	₹20,454 cr
EBITDA	₹5,645 cr
EBITDA margin*	27.60%
Profit before tax (PBT)	₹5,694.62 cr
Consolidated net profit (PAT)	₹4,229.33 cr
Basic EPS	₹3.32

Net revenue and EBITDA are company-presentation figures. EBITDA margin is calculated using these rounded figures.

ITC Q2 FY26 Results: Previous-Year Comparison

To understand ITC's year-on-year performance, the following table presents the corresponding financial figures for Q2 FY26.

Financial Metric	Q2 FY26
Gross revenue	₹21,047.45 cr
Revenue from operations	₹21,255.86 cr
Net revenue	₹19,455 cr
EBITDA	₹6,695 cr
EBITDA margin*	34.41%
Profit before tax (PBT)	₹6,978.68 cr
Consolidated net profit (PAT)	₹5,186.55 cr
Basic EPS	₹4.09

Three important trends emerge from these results.

Revenue growth did not translate into higher earnings. Consolidated net revenue increased 5.1%, but EBITDA declined 15.7% and reported PAT fell 18.5%.

Operating profitability weakened. The calculated EBITDA margin declined from approximately 34.41% to 27.60%, a contraction of around 6.8 percentage points. This highlights the impact of weaker cigarette profitability on ITC's overall earnings.

The reported revenue increase requires careful interpretation. Statutory revenue from operations rose 43.9%, largely due to the revised cigarette excise-duty structure. This should not be interpreted as equivalent underlying business growth.

ITC's presentation net revenue is a separate reported measure. It should not be confused with statutory revenue from operations after deducting excise duty.

To assess how ITC's declining profitability and improving non-cigarette businesses relate to its market valuation, check the ITC share price, historical charts and key valuation ratios.

Why Did ITC's Profit Fall in Q2 FY27?

The primary reason for ITC's Q2 FY27 profit decline was the increased tax burden on cigarettes, which affected the company's largest earnings-generating business.

The impact was amplified by weaker cigarette net revenue and a less favourable exceptional-item comparison.

1. Higher cigarette taxation affected profitability

Effective 1 February 2026, the GST Compensation Cess expired, and the Government of India increased GST and central excise duty on cigarettes.

Under the applicable accounting rules, central excise duty is included in reported gross revenue, while GST and the earlier compensation cess are excluded.

Consequently, cigarette gross revenue increased sharply even though the business experienced declining underlying revenue and profitability.

ITC reported the following standalone cigarette performance:

Cigarette Business Metric	Q2 FY27 YoY Change
Gross segment revenue	+78.1%
Net segment revenue	-21.0%
Segment PBIT	-27.2%

The 21% decline in cigarette net revenue provides a more meaningful indication of business performance than the increase in gross revenue.

ITC also reported continuing pressure on legal cigarette industry volumes following the tax increase.

The company responded through calibrated pricing, portfolio changes and new product variants. Its objective was to balance profitability with consumer retention while limiting potential migration towards illicit cigarettes.

However, ITC did not disclose an exact cigarette sales-volume growth or decline percentage in its Q2 presentation. Therefore, the revenue decline should not be treated as a direct measure of volume contraction.

2. Non-cigarette businesses could not offset the cigarette profit decline

ITC's consolidated segment results show how heavily overall profitability remains dependent on cigarettes.

Cigarette segment profit before interest and tax (PBIT) declined from ₹5,462.10 crore in Q2 FY26 to ₹4,044.49 crore in Q2 FY27.

This represents a decline of approximately ₹1,417.61 crore.

Meanwhile, the combined improvement in PBIT across FMCG-Others, agri and paperboards was approximately ₹294.70 crore.

Year-on-year change in consolidated segment PBIT

Business Segment	YoY Change in PBIT
Cigarettes	-₹1,418 crore
FMCG, Agri and Paper combined	+₹295 crore

The combined improvement in these three businesses offset only around 21% of the cigarette segment's profit decline.

This demonstrates that ITC's diversification is producing growth, but the scale of non-cigarette earnings remains considerably smaller than that of cigarettes.

3. Exceptional items affected reported profit

ITC recorded an exceptional expense of ₹25.66 crore in Q2 FY27 relating to the acquisition of Century Pulp & Paper.

In comparison, Q2 FY26 included an exceptional gain of ₹88.08 crore from the settlement of an insurance claim related to leaf tobacco stocks destroyed in an earlier warehouse fire.

The difference resulted in an adverse year-on-year movement of ₹113.74 crore before tax.

However, even after excluding exceptional items, ITC's consolidated PAT declined approximately 17% to ₹4,249 crore from ₹5,121 crore.

Therefore, the earnings contraction was primarily operational rather than simply the result of one-off expenses.

ITC Q2 FY27 Segment-Wise Performance

ITC's consolidated segment results reveal contrasting trends across cigarettes, FMCG, agri, paperboards and other businesses.

While cigarette profits declined substantially, FMCG-Others, agri and paperboards recorded growth in both revenue and PBIT.

ITC Q2 FY27 Segment-Wise Revenue

The following table highlights ITC's segment-wise revenue and year-on-year growth during Q2 FY27.

Business Segment	Q2 FY27 Revenue (YoY)
FMCG - Cigarettes	₹16,237.11 cr (+72.5%)*
FMCG - Others	₹7,218.36 cr (+19.1%)
Agri Business	₹4,550.60 cr (+12.7%)
Paperboards, Paper & Packaging	₹3,017.45 cr (+35.9%)
Others	₹1,449.87 cr (+16.5%)

ITC Q2 FY27 Segment-Wise PBIT

The following table presents ITC's segment-wise profit before interest and tax (PBIT) and year-on-year changes during Q2 FY27.

Business Segment	Q2 FY27 PBIT (YoY)
FMCG - Cigarettes	₹4,044.49 cr (-26.0%)
FMCG - Others	₹576.69 cr (+31.5%)
Agri Business	₹518.41 cr (+14.3%)
Paperboards, Paper & Packaging	₹273.32 cr (+50.7%)
Others	₹176.10 cr (-3.6%)

Cigarettes: Profit declines 26% despite sequential recovery

Cigarettes remained ITC's largest profit contributor in Q2 FY27.

Consolidated cigarette PBIT declined approximately 26% YoY to ₹4,044.49 crore, compared with ₹5,462.10 crore in the previous year.

However, the segment delivered a sequential improvement.

Cigarette PBIT increased 7.3% from ₹3,769.11 crore in Q1 FY27, indicating that ITC's pricing and portfolio interventions were associated with some recovery in profitability.

The segment accounted for approximately 72.4% of the total reported consolidated segment PBIT before finance costs and unallocated items.

This concentration makes cigarette earnings particularly important for ITC's overall financial performance.

The main indicators to monitor are cigarette net revenue, segment profitability, pricing effectiveness and changes in legal cigarette demand.

FMCG-Others: Revenue growth reaches a 14-quarter high

ITC's FMCG-Others business was one of the strongest performers in Q2 FY27.

Consolidated revenue increased 19.1% to ₹7,218.36 crore, while segment PBIT rose 31.5% to ₹576.69 crore.

The company reported its strongest FMCG-Others revenue growth in 14 quarters and its fourth consecutive quarter of double-digit revenue growth.

On a standalone basis, FMCG-Others revenue increased 15.7% to ₹6,967.17 crore.

More importantly, profitability improved alongside revenue.

ITC FMCG-Others Q2 FY27 Standalone Financial Performance

The following table highlights ITC's standalone FMCG-Others financial performance and year-on-year growth during Q2 FY27.

Standalone FMCG Metric	Q2 FY27 and YoY Growth
Segment EBITDA	₹723 cr (+21.7% YoY)
EBITDA margin	10.4% (over +50 bps YoY)
Revenue	₹6,967.17 cr (+15.7% YoY)

ITC FMCG-Others Q2 FY26 Standalone Financial Performance

For a year-on-year comparison, the following table presents ITC's standalone FMCG-Others financial performance during Q2 FY26.

Standalone FMCG Metric	Q2 FY26
Segment EBITDA	₹594 cr
EBITDA margin	9.9%
Revenue	Approximately ₹6,024 cr

ITC reported that the FMCG-Others EBITDA margin expanded by more than 50 basis points on both YoY and QoQ bases, supported by product-mix improvements, cost management and calibrated pricing.

Which FMCG categories drove growth?

ITC reported growth exceeding 20% across biscuits, snacks, noodles, spices, salt, frozen snacks, homecare and notebooks.

Dairy and personal-wash products delivered high-teen growth.

Brands including Aashirvaad, Sunfeast, Bingo!, YiPPee!, Sunrise and ITC Master Chef continued to support growth through portfolio expansion, product launches and distribution.

New-generation sales channels, including e-commerce, quick commerce and modern trade, maintained strong momentum. General trade also showed improved performance.

The improvement is relevant because revenue growth accompanied by higher margins indicates stronger profitability, not just expansion in sales.

However, edible oils, packaging materials and other input costs continued to create pressure. Sustaining margins will require effective cost control without weakening product competitiveness.

Was FMCG growth organic or acquisition-led?

The distinction matters because newly consolidated businesses contributed to ITC's reported FMCG performance.

ITC disclosed the following growth indicators:

FMCG Growth Indicator	Q2 FY27
Consolidated revenue growth	19%
Like-for-like revenue growth	17.3%
Growth excluding atta	23%
Digital-first and organic portfolio growth	Over 70%
Digital-first and organic annual revenue run-rate	Over ₹1,800 cr

The 17.3% like-for-like growth indicates that business expansion was not solely dependent on acquisitions.

Meanwhile, the higher growth excluding atta suggests stronger momentum across several other FMCG categories.

The digital-first and organic portfolio also showed rapid expansion, although the ₹1,800 crore figure represents an annualised revenue run-rate, not actual quarterly revenue.

For investors, the next test will be whether ITC can sustain double-digit organic FMCG growth while improving margins.

Agri Business: Revenue grows despite export disruptions

ITC's consolidated agri revenue increased 12.7% YoY to ₹4,550.60 crore, while segment PBIT rose 14.3% to ₹518.41 crore.

Growth was supported by value-added agricultural products, particularly spices and fruits and vegetables, as well as leaf tobacco exports.

However, the business faced challenges from trade disruptions linked to the West Asia conflict.

ITC reported delayed customer call-offs, shipping constraints and higher ocean freight costs. Lower domestic leaf tobacco demand, associated with weakness in the cigarette industry, also remained a concern.

The company has been working to diversify export destinations and increase its contribution from value-added agricultural products.

ITC IndiVision, its nicotine and nicotine-derivatives subsidiary, recorded positive PBIT for the third consecutive quarter.

An important consideration is the seasonal nature of the agri business.

Consolidated agri revenue declined sequentially from ₹8,137.81 crore in Q1 FY27 to ₹4,550.60 crore in Q2 FY27. However, agricultural procurement cycles and shipment timing can significantly influence quarterly comparisons.

Investors should therefore focus on export demand, shipment execution, product mix and segment margins rather than interpreting a single sequential revenue decline as a deterioration in long-term performance.

Paperboards, Paper & Packaging: Profit grows faster than revenue

ITC's paperboards, paper and packaging business delivered a strong quarter.

Consolidated revenue increased 35.9% YoY to ₹3,017.45 crore, while segment PBIT grew 50.7% to ₹273.32 crore.

Part of this revenue growth was attributable to the Century Pulp & Paper acquisition, completed on 1 August 2026.

Therefore, headline growth does not represent entirely organic expansion.

ITC's standalone like-for-like figures, excluding Century Pulp & Paper, provide a better understanding of the existing business.

Like-for-Like Paper Metric	Q2 FY27 YoY Change
Segment revenue	+10%
Segment PBIT	+52%
Segment PBIT margin	+320 bps

The improvement in like-for-like profitability suggests that stronger demand, pricing and operational performance contributed to earnings growth independently of the acquisition.

Nevertheless, the segment continues to face elevated wood prices due to lower-than-expected harvesting and competition for raw materials.

Low-priced paper imports also remain an industry challenge.

The Minimum Import Price on virgin multi-layered paperboard has been extended until 31 March 2027. This provides a measure of protection, although its effectiveness will depend on market conditions.

ITC expects some moderation in wood prices, but this remains a management expectation rather than a confirmed cost reduction.

The key indicators for investors are the profitability of acquired operations, like-for-like margins, input costs and the returns generated from additional manufacturing capacity.

Other Businesses: IT services and fresh-food operations

ITC's consolidated Others segment reported revenue growth of 16.5% YoY to ₹1,449.87 crore.

However, segment PBIT declined 3.6% to ₹176.10 crore.

This indicates that higher revenue did not translate into improved segment profitability.

The segment includes information technology services, ITC Grand Central Hotel in Mumbai and fresh-food activities.

ITC identified ITC Infotech among the group businesses delivering strong performance.

Its fresh-food operations also continued to expand, with gross merchandise value (GMV) increasing 53% YoY.

The business reported an annualised GMV run-rate exceeding ₹320 crore and a network of more than 80 cloud kitchens across five cities.

However, GMV measures transaction activity and should not be confused with recognised revenue or profit.

ITC Hotels Limited is separately listed following its demerger and is accounted for as an associate. ITC's consolidated share of profit from associates and joint ventures increased to ₹96.96 crore from ₹66.36 crore.

This represents the combined contribution from equity-accounted investments, not ITC Hotels' standalone profit.

ITC Standalone vs Consolidated Results

ITC's standalone and consolidated results present different views of its financial performance.

Standalone results reflect ITC Limited's own operations, while consolidated results also include subsidiaries and the applicable share of profits or losses from associates and joint ventures.

The following table compares ITC's standalone and consolidated financial performance during Q2 FY27.

Financial Metric	Q2 FY27 Standalone vs Consolidated
Net revenue	Standalone: ₹18,449 cr / Consolidated: ₹20,454 cr
EBITDA	Standalone: ₹5,160 cr / Consolidated: ₹5,645 cr
Reported PAT	Standalone: ₹4,137.12 cr / Consolidated: ₹4,229.33 cr
PAT growth YoY	Standalone: -20.1% / Consolidated: -18.5%

Net revenue and EBITDA are company-presentation figures; PAT is from statutory financial results.

Standalone PAT declined more sharply than consolidated PAT, reflecting the overall contribution of subsidiaries and equity-accounted investments.

For assessing the company's consolidated earnings, group-level results offer a broader view.

However, standalone disclosures remain useful for analysing underlying cigarette performance, FMCG margins and like-for-like paper-segment growth.

Investors should avoid combining standalone segment data with consolidated profit figures without identifying the reporting basis.

ITC Q2 FY27 QoQ and H1 Performance

Year-on-year results indicate continued pressure on earnings, but quarter-on-quarter comparisons reveal some improvement in operating profitability.

Did ITC's profitability improve from Q1 FY27?

ITC's consolidated reported PAT declined 6.2% QoQ, but profit before exceptional items increased 4.9%.

The following tables compare ITC's consolidated financial and segment-wise performance during Q2 FY27 and Q1 FY27.

ITC Q2 FY27 Consolidated Financial Performance

Consolidated Metric	Q2 FY27
Reported PAT	₹4,229.33 cr
Reported PBT	₹5,694.62 cr
PBT before exceptional items	₹5,720.28 cr
Cigarette PBIT	₹4,044.49 cr
FMCG-Others PBIT	₹576.69 cr
Paperboards PBIT	₹273.32 cr

ITC Q1 FY27 Consolidated Financial Performance

For a sequential comparison, the following table presents ITC's financial and segment-wise performance during Q1 FY27.

Consolidated Metric	Q1 FY27
Reported PAT	₹4,508.79 cr
Reported PBT	₹5,860.85 cr
PBT before exceptional items	₹5,454.97 cr
Cigarette PBIT	₹3,769.11 cr
FMCG-Others PBIT	₹484.97 cr
Paperboards PBIT	₹216.81 cr

The sequential improvement was visible across several operating segments.

Cigarette PBIT increased 7.3%, FMCG-Others PBIT grew 18.9%, and paperboards PBIT increased 26.1%.

However, reported PAT declined because Q1 FY27 included a ₹405.88 crore exceptional gain arising from the fair-value remeasurement of ITC's existing investment in Sproutlife Foods.

Q2 FY27, in contrast, recorded an exceptional expense of ₹25.66 crore associated with the Century Pulp & Paper acquisition.

Therefore, the decline in reported sequential PAT partly reflects the difference in exceptional items.

The increase in PBT before exceptional items provides evidence of operating recovery, but a single quarter of improvement does not establish a sustained earnings turnaround.

ITC H1 FY27 financial performance

The first-half results show that the impact of cigarette taxation extended beyond one quarter.

The following table highlights ITC's consolidated financial performance during H1 FY27.

Consolidated Metric	H1 FY27
Statutory revenue from operations	₹60,101.70 cr
PBT before exceptional items	₹11,175.25 cr
Reported PBT	₹11,555.47 cr
Reported PAT	₹8,738.12 cr
Basic EPS	₹6.83

Source: ITC unaudited consolidated financial results for the six months ended 30 September 2026.

Statutory revenue increased approximately 35.4%, but the comparison was distorted by cigarette excise duty.

Meanwhile, PBT before exceptional items declined 20.3%, and consolidated PAT fell 17%.

H1 FY27 included a net exceptional gain of ₹380.22 crore, mainly comprising the Q1 Sproutlife remeasurement gain less the Q2 acquisition-related expense.

The first-half figures reinforce that ITC's underlying profitability remained weaker than a year earlier, despite growth across non-cigarette businesses.

ITC H1 FY27 Cash Flow and Balance Sheet

ITC's H1 FY27 cash flow provides an important perspective on earnings quality.

Although reported PAT declined, the company generated higher operating cash flow. However, acquisitions, dividends and working-capital movements also influenced its overall financial position.

Operating Cash Flow Rises Despite Lower Net Profit

ITC generated ₹8,362.97 crore in net cash from operating activities during H1 FY27, compared with ₹6,162.60 crore in H1 FY26.

This represents an increase of approximately 35.7%.

The following table highlights ITC's key cash flow metrics during H1 FY27.

Cash Flow Metric	H1 FY27
Cash generated from operations before tax	₹10,495.81 cr
Net operating cash flow	₹8,362.97 cr
Purchase of PPE and related assets	₹1,085.98 cr
Business-combination payments, net	₹3,994.28 cr
Dividends paid	₹10,026.20 cr

A simple measure of cash conversion, calculated as operating cash flow divided by reported PAT, improved to approximately 0.96 times in H1 FY27 from 0.59 times in H1 FY26.

This suggests that cash generation held up better than reported earnings.

Similarly, deducting cash spent on property, plant, equipment and related assets from operating cash flow produces approximately ₹7,276.99 crore.

This is an indicative operating cash flow less capital expenditure calculation, not an officially disclosed free-cash-flow metric. It excludes business acquisitions and other investing activities.

There are also important qualifications.

Inventory-related working-capital movements absorbed ₹3,856.93 crore during H1 FY27, while increases in trade payables and other liabilities provided a substantial offset.

Furthermore, dividend payments of ₹10,026.20 crore exceeded operating cash flow during the period.

These payments largely relate to previously declared dividends, so they should not be interpreted as evidence of an FY27 dividend commitment.

The improvement in operating cash flow is favourable, but its sustainability will depend on working-capital management, future profitability and capital-allocation requirements.

ITC balance sheet: Borrowings decline, inventories increase

ITC maintained a substantial investment and liquidity base as of 30 September 2026.

The following tables compare ITC's balance-sheet position as of 30 September 2026 and 31 March 2026.

ITC Balance Sheet as of 30 September 2026

Balance Sheet Metric	30 Sep 2026
Total assets	₹96,355.52 cr
Total equity	₹71,939.99 cr
Inventories	₹22,975.37 cr
Trade receivables	₹4,753.79 cr
Cash and cash equivalents	₹834.62 cr
Other bank balances	₹3,178.37 cr
Current investments	₹17,509.81 cr
Borrowings, excluding leases	₹242.93 cr

ITC Balance Sheet as of 31 March 2026

Balance Sheet Metric	31 Mar 2026
Total assets	₹93,792.38 cr
Total equity	₹72,873.02 cr
Inventories	₹18,622.96 cr
Trade receivables	₹3,922.86 cr
Cash and cash equivalents	₹643.46 cr
Other bank balances	₹2,365.33 cr
Current investments	₹20,750.64 cr
Borrowings, excluding leases	₹2,186.22 cr

Borrowings excluding leases declined by approximately ₹1,943 crore between March and September 2026.

Meanwhile, cash, other bank balances and current investments totalled approximately ₹21,523 crore at the end of September.

However, the entire amount should not automatically be classified as freely available cash because financial investments and bank balances can differ in liquidity or restrictions.

Working capital deserves closer attention.

Inventories increased by approximately ₹4,352 crore, while trade receivables rose by around ₹831 crore.

These movements indicate more capital tied up in operating assets. The acquisition of Century Pulp & Paper also affected balance-sheet comparability.

For investors, ITC's balance sheet provides financial flexibility, but acquisition spending, cash returns to shareholders and inventory management remain important considerations.

ITC Acquisitions and Business Developments

ITC made several corporate changes during Q2 FY27, including acquisitions and restructuring proposals aimed at expanding its non-cigarette businesses.

These developments may influence future earnings, but their effects need to be assessed separately from organic growth.

Century Pulp & Paper acquisition

ITC completed the acquisition of the Century Pulp & Paper undertaking of Aditya Birla Real Estate Limited on 1 August 2026.

The acquisition expanded ITC's manufacturing capacity and product portfolio in paper and pulp-related businesses.

Century Pulp & Paper's operations were consolidated from the acquisition date. As a result, Q2 FY27 paper-segment figures are not directly comparable with the corresponding previous-year quarter.

The company's like-for-like paper revenue growth of 10% and PBIT growth of 52% are therefore more useful for measuring the performance of the existing operations.

Future returns will depend on capacity utilisation, integration efficiencies, working-capital requirements and profitability.

Sproutlife Foods becomes a wholly owned subsidiary

Sproutlife Foods, associated with the Yoga Bar brand, became an ITC subsidiary effective 1 April 2026 after ITC obtained the right to nominate a majority of its board.

On 28 September 2026, ITC acquired additional shares, making Sproutlife a wholly owned subsidiary.

Subsequently, on 2 November 2026, ITC's board approved a proposed amalgamation of Sproutlife with ITC Limited, subject to the necessary approvals.

The acquisition supports ITC's expansion into health-focused packaged foods and digital-first consumer products.

However, the change in consolidation affects year-on-year FMCG comparability. Investors should therefore continue to distinguish acquired revenue from like-for-like growth.

Proposed ITC Infotech and Happiest Minds combination

On 31 August 2026, ITC announced a proposed strategic combination of ITC Infotech and Happiest Minds Technologies.

Under the announced structure, ITC Infotech proposed acquiring a 22.1% promoter stake in Happiest Minds in two tranches, followed by a scheme of amalgamation.

The proposed structure also envisages the listing of ITC Infotech shares following the required approvals.

The transaction is intended to expand the technology business across artificial intelligence, digital engineering, cloud, cybersecurity and related services.

However, the combination was not completed as part of ITC's Q2 FY27 results and remained subject to applicable approvals.

Therefore, the proposed combined company's future earnings should not be treated as part of ITC's reported Q2 performance.

ITC Q2 FY27 Dividend and Share Price Reaction

ITC's dividend history and the market's response to its Q2 results provide additional context for shareholders.

Did ITC announce a dividend in Q2 FY27?

ITC did not declare a fresh interim dividend with its Q2 FY27 results announced on 2 November 2026.

For context, the company's total FY26 dividend was ₹14.50 per share.

FY26 Dividend Component	Amount Per Share
Interim dividend	₹6.50
Final dividend	₹8.00
Total FY26 dividend	₹14.50

The ₹14.50 payment represents the historical FY26 dividend and should not be interpreted as an assured distribution for FY27.

Future dividend decisions will depend on earnings, cash generation, acquisitions, capital expenditure and the board's capital-allocation priorities.

ITC share price reaction after Q2 FY27 results

ITC announced its financial results on 2 November 2026.

On 3 November 2026, the first trading session after the announcement, ITC shares closed at ₹273.90 on the NSE, compared with the previous close of ₹266.40.

Share Price Metric	Value
NSE closing price (3 November 2026)	₹273.90
Previous closing price	₹266.40
Price change	+₹7.50
Percentage change	+2.82%

The positive reaction came despite the decline in reported profit.

Possible areas of investor interest included the sequential recovery in cigarette PBIT, strong FMCG-Others growth, improving paper-segment profitability and ITC's cash-generation position.

However, the share-price movement alone does not establish which of these factors drove market sentiment.

Investors should distinguish the immediate market reaction from the longer-term question of whether ITC can restore consolidated earnings growth.

ITC Valuation, Risks and Key Investor Indicators

ITC's Q2 FY27 results make earnings sustainability particularly important for valuation.

The company continues to generate significant operating cash flow and maintains a substantial investment base. However, declining cigarette earnings create uncertainty around the pace of consolidated profit recovery.

ITC valuation after Q2 FY27 results

At the NSE closing price of ₹273.90 on 3 November 2026, ITC traded at an indicative trailing price-to-earnings ratio of approximately 18.2 times.

This can be calculated from the company's reported attributable earnings:

Valuation Indicator	Value
NSE closing price, 3 Nov 2026	₹273.90
Approximate trailing 12-month EPS	₹15.07
Indicative trailing P/E	18.2x
FY26 dividend per share	₹14.50
Historical dividend yield at that price	Approximately 5.3%

The trailing earnings calculation uses FY26 profit attributable to shareholders, less H1 FY26 attributable profit, plus H1 FY27 attributable profit. Approximate EPS uses current equity share capital. These are analytical calculations, not forward earnings estimates.

The P/E ratio reflects past earnings and does not establish whether ITC's shares are attractively or expensively valued.

Given the change in cigarette taxation, investors need to consider whether historical earnings are representative of the company's future profitability.

Similarly, the historical dividend yield does not guarantee an equivalent FY27 payout.

Other useful valuation considerations include the profitability of FMCG and paper operations, acquisition returns, cash generation and the durability of cigarette segment earnings.

Key risks and what investors should monitor

The following factors will be important in assessing the sustainability of ITC's financial performance.

Risk Area	What Investors Should Monitor
Cigarette taxation	Changes in tax rates, net revenue and PBIT
Illicit cigarette trade	Consumer migration, legal-industry volumes and pricing response
Cigarette earnings dependence	Segment contribution to consolidated profits
FMCG input-cost inflation	Raw-material costs, pricing and EBITDA margins
Paper-sector profitability	Wood prices, import competition and like-for-like margins
Agri export disruption	Freight costs, shipment timing and customer demand
Acquisition integration	Working capital, operating efficiency and returns
Financial comparability	Excise-duty effects and acquisition-led growth

What should ITC investors track next?

The main question for ITC is whether the stabilisation of cigarette profits can combine with growth in non-cigarette businesses to restore consolidated earnings.

Several measurable indicators will help assess that progress.

Cigarette profitability: Consolidated cigarette PBIT recovered 7.3% sequentially but remained 26% below Q2 FY26. Sustained improvement will require continued monitoring of pricing, net revenue and legal market demand.

FMCG organic growth and margins: Like-for-like growth of 17.3% and a standalone EBITDA margin of approximately 10.4% provide useful benchmarks for subsequent quarters.

Paper acquisition performance: Investors should monitor the integration of Century Pulp & Paper, alongside the existing paper business's like-for-like revenue and profit growth.

Cash conversion and working capital: The improvement in H1 operating cash flow needs to be assessed alongside rising inventories, receivables, capital expenditure and acquisition payments.

Corporate transactions: The proposed Sproutlife amalgamation and ITC Infotech-Happiest Minds combination could influence future business structure and capital allocation, depending on approvals and execution.

Management guidance: ITC's Q2 disclosures describe business priorities and operating measures, but do not provide a quantified group-wide FY27 earnings forecast. Investors should distinguish management's directional expectations from confirmed financial outcomes.

Taken together, these indicators provide a more meaningful basis for evaluating ITC's performance than headline statutory revenue growth alone.

Conclusion

ITC's Q2 FY27 results reflect a significant adjustment to the revised cigarette taxation structure.

Consolidated PAT declined 18.5% to ₹4,229.33 crore, while EBITDA fell 15.7%. Although cigarette profitability improved sequentially, the business remained considerably weaker than in the corresponding previous-year quarter.

At the same time, FMCG-Others, agri and paperboards delivered stronger operating performance. Improved organic FMCG growth, higher paper profitability and operating cash generation indicate progress across the company's diversified portfolio.

However, cigarette earnings remain the dominant influence on consolidated profitability.

For investors, the key issue is whether cigarette profits can stabilise while non-cigarette businesses continue expanding profitably. Sustained earnings improvement, rather than the increase in excise-inflated reported revenue, will be the more important measure of ITC's financial recovery.

Want to understand how ITC's earnings changed after the cigarette duty increase and the challenges faced during the first quarter? Read the ITC Q1 FY27 Results Analysis for details on revenue growth, profitability and the impact of higher taxation.

Frequently Asked Questions

1. What was ITC's net profit and EPS in Q2 FY27?

ITC reported consolidated net profit of ₹4,229.33 crore in Q2 FY27, down 18.5% from ₹5,186.55 crore in Q2 FY26. Profit attributable to ITC shareholders was ₹4,168.40 crore. Consolidated basic EPS declined from ₹4.09 to ₹3.32.

2. Why did ITC's profit fall despite higher revenue?

ITC's profit declined mainly because of increased cigarette taxation effective 1 February 2026. The higher excise duty inflated reported gross revenue, while cigarette net revenue declined 21% and standalone segment PBIT fell 27.2%. Growth in non-cigarette businesses was insufficient to offset the decline.

3. How did ITC's FMCG and paper businesses perform in Q2 FY27?

Consolidated FMCG-Others revenue increased 19.1% to ₹7,218.36 crore, with PBIT growing 31.5%. Paperboards, paper and packaging revenue grew 35.9%, while PBIT rose 50.7%. Paper growth included the Century Pulp & Paper acquisition, while FMCG-Others recorded 17.3% like-for-like revenue growth.

4. Did ITC announce a dividend with Q2 FY27 results?

No. ITC did not announce a fresh interim dividend with its Q2 FY27 results on 2 November 2026. Its total dividend for FY26 was ₹14.50 per share, consisting of an interim dividend of ₹6.50 and a final dividend of ₹8.00.

5. Did ITC's cigarette business improve in Q2 FY27?

ITC's cigarette business improved sequentially, with consolidated cigarette PBIT increasing 7.3% from Q1 FY27 to ₹4,044.49 crore. However, PBIT remained approximately 26% below Q2 FY26. The improvement indicates some recovery in quarterly profitability, but not a full reversal of the tax-related pressure.

Official Sources and References

The financial and operational figures are based primarily on ITC's disclosures published on 2 November 2026.

• ITC Q2 FY27 Consolidated Financial Results
• ITC Q2 FY27 Standalone Financial Results
• ITC Q2 FY27 Investor Presentation
• ITC Official Q2 FY27 Media Statement
• ITC Official Investor Relations

Reporting note: ITC's Q2 FY27 and H1 FY27 financial results are unaudited and have undergone a limited review. The statutory auditors issued an unmodified review report.

Revenue reconciliation note: ITC's presentation reports consolidated net revenue of ₹20,454 crore. Statutory revenue from operations less excise duty equals ₹20,268.63 crore. The cited presentation does not provide a complete reconciliation of these measures. Accordingly, this article preserves their distinct reporting labels and uses the presentation's net revenue consistently for the calculated EBITDA margin.