ITC share price: Is flat profit a red flag or a buying opportunity?

Despite pressures from elevated input costs, the company’s key segments—cigarettes, FMCG, and agri business—continued to support top-line performance.

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ITC share price

Shares of ITC Ltd traded in the green on August 4 after the diversified conglomerate posted its Q1FY26 results, showing flat profit growth but a robust rise in revenue. Despite pressures from elevated input costs, the company’s key segments—cigarettes, FMCG, and agri business—continued to support top-line performance.

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Profit Flat, But Revenue Jumps 20%

In the quarter ended June 30, 2025, ITC reported a standalone net profit of Rs 4,912 crore, nearly unchanged from Rs 4,917 crore in the same period last year. However, revenue rose 20% to Rs 21,059 crore from Rs 17,593 crore a year ago, indicating healthy demand across major business lines.

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Cigarettes Remain a Strong Pillar

The cigarette segment posted an 8% revenue growth, supported by a stable tax regime and market interventions. That said, margins remained under pressure due to high-cost leaf tobacco, and the company warned that this trend might persist in the near term.

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FMCG Shows Momentum, Paper Business Under Strain

ITC’s FMCG division continued to gain traction, with improving growth across food and personal care segments. In contrast, the paperboard segment remained subdued, facing cost headwinds and pricing pressure.

The company expressed optimism about the months ahead, citing factors such as lower inflation, interest rate cuts, RBI liquidity support, and government spending as potential growth boosters.

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Stock in Green, Analysts Stay Positive

As of 9:25 a.m. on August 4, ITC shares were trading at Rs 419.15 on the NSE, up 0.65% from the previous close. Multiple global brokerages remained bullish on the stock, citing a recovery in core segments and upside potential.

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Should You Buy, Sell or Hold?

Morgan Stanley: Maintains ‘Overweight’ rating, target price Rs 500. Says revenue beat was driven by agri business.

Citi: Reiterates ‘Buy’ call, target Rs 500. Expects margin recovery and stronger earnings in H2FY27.

Macquarie: Calls the stock ‘Outperform’, target Rs 500. Notes robust cigarette growth, improving FMCG margins.

Jefferies: Retains ‘Buy’ with a higher target of Rs 535. Highlights multi-quarter high cigarette volume growth, though EBIT margins declined.

Emkay Global: Sees gradual recovery in cigarette volumes and emphasises the importance of containing market share loss. Warns of near-term risks tied to potential tax changes under the compensation cess replacement.