ITC shares gained nearly 4% despite weak Q1FY27 results, as investors focused on attractive valuations after the stock's sharp correction this year. While profit declined due to higher taxes and input costs, strong growth in the FMCG and paperboards businesses, along with better-than-expected cigarette volumes, supported market sentiment.
However, ITL's stocks have risen by as much as 3.81% in the current trading week on NSE while delivering below-expected results in Q1 FY27. The stocks opened at ₹284.45 a piece as against ₹281 at the closing level of the previous day.
The bullish sentiment was driven by the steep decline in ITC shares in the past days. So far in 2026, ITC stocks have fallen by almost 30%, which made investors look into valuations.
ITC Q1 FY27 Results: Revenue Growth But Profit Declines
ITC recorded a year-on-year growth of 27.6% in its consolidated income from operations to ₹29,523.30 crore in Q1FY27. However, consolidated net income showed a decline of 15.6% on a year-on-year basis to ₹4,508.79 crore.
The net profit recorded was based on a one-time income of ₹405.88 crore arising due to revaluation of ITC’s existing holding in Sproutlife Foods Pvt. Ltd., the company that manufactures Yoga Bar. Profit after tax, excluding exceptional items, fell by 23.2% on a year-on-year basis to ₹4,103 crore.
Consolidated EBITDA fell by 24% in Q1FY27 on account of higher tax rates, increased cost of inputs and weak performance in core segments.
During Q1FY27, ITC’s revenue stood at ₹16,908 crore, which is lower than the expectation of ₹17,362 crore. Consolidated EBITDA was ₹4,514 crore as against the estimate of ₹4,966 crore. The EBITDA margin fell to 26.7% as against the estimated figure of 2
Cigarette Business Hit by Tax Increase
There was considerable pressure on the cigarette business of ITC post the rise in taxation. There was an effective increase of around 70% in cigarette taxation.
Net revenue from the cigarette division dropped by 25% and there was a drop of 35% in EBIT to ₹3,341 crore from ₹5,145 crore in the previous year. Cigarette volumes fell by 5-6%, which was lesser than the expected drop of 8-10%.
ITC has absorbed some of the effect of the tax hike and raised prices in a phased manner to prevent loss of market share. ITC has launched nearly 30 varieties of cigarettes as part of portfolio reengineering.
FMCG Business Shows Strong Recovery
One of the important positive factors for ITC was its FMCG-Others, with 12% increase in revenues. The company had revenues worth ₹6,482 crore and PBIT rose by 21% to ₹479 crore.
This segment received benefit of good performances of dairy, snacks, noodles, and frozen snacks, which witnessed 20% growth. Personal care products also saw mid-teens growth. FMCG margins saw an expansion of 55 bps.
The company pointed out that consumption was resilient in both rural and urban markets, and recovery could be seen in discretionary items such as notebooks.
Agri Business Faces Geopolitical Challenges
In spite of that, the agri segment of ITC faced some problems arising from the disturbance caused by the conflict in West Asia. Income fell by 16.55% to ₹8,082.06 crore year-on-year, while EBIT fell 18%.
Prolonged geopolitics tension, trade disruption, El Niño and irregular monsoon may affect the economy, inflation, and the current account.
Paperboards Business Outperforms
The paper and paperboard business delivered a strong performance during Q1 FY27. Revenue increased 9% to ₹2,307 crore, while PBIT jumped 38% to ₹224 crore.
The improvement was supported by better operational performance and demand recovery in the segment.
Why ITC Share Price Surged After Q1 Results?
With poor financial results, however, ITC stock rose by about 4% following valuation and correction of the stock. Since the stock price has declined by close to 30% in 2026, its valuation is now at around 17 times FY28 EPS, which is more favorable.
ITC FMCG business strength and higher than expected cigarette volumes, as well as improved paper boards operations, have further supported the market.
