Despite muted profit growth, analysts said ITC showed strength in key verticals like agri and cigarettes, while FMCG margins showed early signs of recovery.
Shares of ITC were subdued on Monday even as the company posted steady first quarter (Q1) results, with revenue growth of 19% year-on-year (YoY) and modest profit growth, driven by a strong performance in its agri and cigarettes businesses and stable margins in FMCG despite cost pressures.
SEBI-registered analysts Varunkumar Patel and Financial Independence both flagged positive business momentum and operating resilience across segments.
Brokerages including Goldman Sachs, Macquarie, and Jefferies also maintained bullish ratings, expecting margins to improve in the second half of the fiscal year.
Q1 Earnings Review
ITC reported standalone gross revenue of ₹20,911 crore for the June 2025 quarter, up 20% from a year ago. Net profit stood at ₹4,912 crore, rising 1.9% YoY, while EBITDA came in at ₹6,261 crore, a 2.9% increase.
The cigarettes segment generated ₹8,520 crore in revenue, up 7.6% YoY, with segment profit increasing 3.7% to ₹5,145 crore. Patel noted strong traction in premium brands such as Gold Flake Indie and Classic Icon.
He added that market share was supported by strategic efforts to curb illicit trade and strengthen distribution, though margins were impacted by high-cost leaf inventory. Procurement prices, he said, have now started softening.
FMCG–Others posted ₹5,777 crore in revenue, up 5.2% YoY. Excluding the notebooks category, growth was 8.6%. Patel noted that segments such as staples, biscuits, dairy, homecare, and premium personal care were key drivers.
Sequential margin improvement of 50 basis points came on the back of price optimisation and portfolio premiumisation. Patel highlighted that digital-first brands like Yogabar and Meatigo are scaling fast, with an annualised run rate nearing ₹1,000 crore.
The agri business delivered ₹9,685 crore in revenue, rising 39% YoY, with segment profit up 22% to ₹434 crore. Patel pointed to strong performance in bulk trading, leaf tobacco exports, and nicotine derivatives. He also noted that the ITCMAARS agri-tech platform now handles nearly 40% of wheat sourcing for Aashirvaad Atta.
The paperboards and packaging business saw 7% revenue growth to ₹2,116 crore, but segment profit dropped nearly 38% to ₹163 crore.
Patel cited global oversupply and high wood costs but mentioned continued momentum in the Décor and sustainable packaging lines.
In the FoodTech vertical, ITC’s brands such as Master Chef Creations and Sunfeast Baked Creations now live across 60 kitchens in five cities, with gross merchandise value already crossing ₹100 crore. This unit is now reported under the ‘Others’ segment.
Financial Independence rated the quarter “positive,” stating that ITC delivered strong top-line growth and margin resilience despite uneven profitability.
The firm cited traction in agri and cigarettes, and pointed to potential tailwinds from easing inflation and tax-related benefits in the coming quarters.
Technical Outlook
SEBI-registered analyst Varunkumar Patel noted the stock is consolidating between ₹405 and ₹450, with key support at ₹405 and strong resistance at ₹450.
The stock sits between the 20-day (₹414.8) and 50-day (₹417) exponential moving averages, signaling indecision. Relative strength index (RSI) at 51 indicates neutral momentum.
He said a breakout above ₹450 could trigger upside toward ₹475–₹490, while a breakdown below ₹405 may open downside to ₹390–₹375. Until then, he views the stock as trading in a defined range.
Brokerages View
Goldman Sachs maintained a ‘Buy’ rating on ITC with a target price of ₹490, stating that Q1 results were broadly in line with estimates.
The firm expects cigarette margins to recover in H2 and noted that FMCG growth is improving, with margin recovery also likely in the second half.
On the paper segment, Goldman believes margins may have bottomed out and projects earnings acceleration in the second half of FY27.
Macquarie retained its ‘Outperform’ rating with a ₹500 target, expressing a constructive view on ITC’s growth outlook, despite continued weakness in the paper business.
Jefferies also reiterated a ‘Buy’ call with a higher target price of ₹535.
On Stocktwits, retail sentiment for ITC was ‘bullish’ amid ‘high’ message volume.
The stock has declined 13.6% so far in 2025.
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