Il Nuovo Postiglione - ITC shares rise as analysts anticipate gradual cigarette-business recovery

ITC shares rose 1. 5 per cent on Tuesday after the company reported its quarterly results post-market hours on Monday. The company's counter at 09:21 AM was trading 0. 24 per cent higher at ₹266 per share on NSE.

In comparison, Nifty 50 was trading 0. 63 per cent higher at 23,587. 80. In intraday trade, the stock gained 1.

5 per cent to touch the day's high at ₹270 per share. ITC Q2FY27 results highlights Cigarette-to-soap conglomerate ITC reported an 18. 7 per cent year-on-year (Y-o-Y) drop in consolidated net profit (attributable to the owners of the company) at ₹4,168. 40 crore for the second quarter of financial year 2026-27 (Q2FY27), as a steep increase in taxes weighed on its cigarette business even as other segments posted strong growth.

In the same period a year earlier, its net profit was at ₹5,126. 11 crore. Consolidated net revenues rose 3. 9 per cent Y-o-Y to ₹20,269 crore.

Both revenues and profit marginally exceeded the Bloomberg consensus estimates of ₹20,111 crore and ₹4,136 crore, respectively. On a sequential basis, however, net revenues rose 6 per cent from ₹19,114 crore in Q1FY27, while net profit declined 5. 1 per cent from the preceding quarter. Brokerage view on ITC Jefferies The brokerage also said that Cigarette volumes & EBIT continue to decline, reflecting pressure from sharp tax hikes, although ITC management has undertaken a series of measures to navigate these challenging conditions.

Calibrated price hikes should support a gradual recovery, even as significant tax arbitrage on illicit cigarettes persists. FMCG & Paperboards reported a strong 2Q, while Agri was in line. “We trim EPS by 2-3 per cent but expect a sequential improvement in cigarette trends and recommend ‘Buy’,” the brokerage said. It also said that, the operating environment remains uncertain amid geopolitical tensions, elevated crude/input costs, and inflationary pressures.

Indian demand, however, remained resilient across rural/urban, though uneven monsoons and El Niño pose risks to agri output and inflation PL Capital The brokerage upgraded the stock’s rating from hold to ‘accumulate’ after Q2FY27 results. It observed that ITC reported an 8 per cent decline in cigarette volumes, however, EBIT also increased as it continued to increase prices to pass on the excise burden. “We estimate that ITC would have passed on over 75-80 per cent of the burden so far, suggesting that steady recovery should continue,” it said. PL Capital also said that FMCG growth and margins have been positive across food, HPC, and stationery; however, the margin trajectory needs to be watched out for given rising input costs, although demand remains steady so far.

It also said that the company’s paper business will likely gain from extension of MIP, integration of Century Paper and higher prices, although input costs remain elevated. “We expect gradual recovery to set in across businesses; however, demand trends and any potential increase in cigarette duty need to be watched out for. We believe the worst seems over, although cigarette volumes recovery will be gradual. However, downside seems limited given a 50 per cent decline from the peak and 5 per cent dividend yield,” the brokerage added.

S.Urgo--INP