ITC Limited Q4 EBITDA beats; All eyes on Q1 as cigarette tax impact plays out

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ITC Limited Q4 EBITDA beats; All eyes on Q1 as cigarette tax impact plays out

J P M O R G A N Asia Pacific Equity Research

22 May 2026

ITC Limited Neutral

ITC.NS, ITC IN

Q4 EBITDA beats; all eyes on Q1 as cigarette tax Price (21 May 26):Rs308.05

impact plays out Price Target (Mar-27):Rs325.00

ITC’s Q4 EBITDA was 3% ahead of our estimate owing to better-than-expected Consumer, Retail, Media

ACprofitability for Cigarettes, FMCG and Paper divisions. Q1FY27 will be crucial to Latika Chopra, CFA

gauge the impact of unprecedented cigarette tax hikes, even as we note ITC has (91-22) 6157-3584

undertaken multiple interventions (staggered price hikes, new SKU introductions, latika.chopra@jpmorgan.com

push to Long segment etc) to mitigate the risk from consumer downtrading to illicit Himanshu Singh

brands and defend its market share. FMCG and Paper businesses seem to be trending (91-22) 6157-3610

in the right direction and a combination of pricing and cost optimization measures himanshu.x6.singh@jpmorgan.com

should mitigate emerging cost inflation risks. We stay Neutral, noting Q1 should see Saransh S Gokhale

a bottoming of volume/EBIT as the full impact of cigarette taxation plays out. (91-22) 6157 3578

saransh.gokhale@jpmchase.com

• Cigarettes – Q1FY27 key to gauge the impact of steep tax hike. Q4 EBIT J.P.Tower,MorganSantacruz(E),India PrivateMumbaiLimited,- 400098,J.P. MorganSEBI

rose 7% y/y (better than expected) benefiting from old inventory sales. Registration: INH000001873, (91-22) 6157-3000.

Reported revenue is not comparable given the change in taxation structure

during the qtr (effective Feb’26). ITC noted performance was strong until

Jan’26. The unprecedented tax hike has necessitated staggered pricing actions Style Exposure