ITC's healthy core business signals rerating scope amid weak Q2 agri show

ITC delivered a healthy performance in core segments in the second quarter of financial year 2026 (Q2FY26) with sequential improvement in margins, though the year-on-year (Yo-Y) performance remained under pressure.

- DEVANGSHU DATTA

Consolidated gross cigarette sales grew 6 per cent Yo-Y and volume growth was also 6 per cent. Cigarette EBIT (earnings before interest and tax) was up 4.2 per cent Yo-Y, but EBIT margin contracted 100 basis point (bp) on year to 58 per cent due to higher leaf tobacco prices.

The consolidated FMCG segment sales grew 8.5 per cent Y-0-Y. Notebooks continued to do badly but staple products have seen strong demand. Snacks and noodles have seen increased grammage, while biscuit Low Unit Packs (LUPs) have seen price cuts. EBIT declined 17 per cent Yo-Y, and the EBIT margin contracted 70bp Yo-Y to 7.2 per cent.

Agribusiness sales declined by 31 per cent Yo-Y hit by delayed cancellations by customers amid tariff uncertainty. EBIT margin rose 360bp Yo-Y to 11.2 per cent. The paper business continued to struggle due to low-priced supplies in global markets (including India), subdued realisations, and high wood prices. But performance was better compared to Q1FY26. The revenue grew 5 per cent Yo-Y, while EBIT margin contracted 290bp Y-0-Y to 8.2 per cent.