1QFY27: Profitability Pressures Intensify Amid Regulatory Headwinds

研报英文原文证据摘录

1QFY27: Profitability Pressures Intensify Amid Regulatory Headwinds

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03 Aug 2026 01:21:28 ET │ 19 pages

ITC (ITC.BO)

CITI'S TAKE

ITC's 1Q performance reflects the first full quarter post the cigarette taxation

increase. Cigarette segment net revenue declined 25% YoY, driven by an

estimated 5% volume decline, partially supported by trade inventory build- Sell

up amid price hikes; we believe the underlying volume decline may have Price (31 Jul 26 15:30) Rs280.95

been steeper. Segment EBIT declined 35% YoY, below our estimate of a 29%

decline. While ITC has implemented calibrated, staggered price increases Target price Rs270.00↓

and launched 30+ new products to re-architect its portfolio and limit from Rs290.00

volume/market share loss to illicit trade, the ~30% YoY decline in cigarette Expected share price return -3.9%EBIT per stick suggests a materially adverse mix and/or insufficient pricing

recovery thus far. We expect near-term performance to remain weak, as full Expected dividend yield 3.6%

pass-through of the tax increase is likely to be implemented only gradually Expected total return -0.3%

through FY27. Key uncertainties remain around demand elasticity, Market Cap Rs3,520,154Mdowntrading to illicit products, pace of pricing actions and competitive

intensity through FY27. Reiterate Sell. US$36,903M

1QFY27 results — Net revenue at Rs169bn declined 14% YoY, vs. Citi/cons. est of

Rs179bn (-10% YoY)/Rs186bn (-6% YoY). EBITDA at Rs45.1bn declined 28% YoY, vs.

Citi/cons est of Rs50.7bn (-19% YoY)/ Rs53.6bn (-14% YoY). Recurring PAT at Price Performance

Rs35.8bn declined 27% YoY, vs. Citi/cons est of Rs40.1bn (-18%)/Rs43.7bn (-11%). (RIC: ITC.BO, BB: ITC IN)

Cigarette: Steep EBIT decline; reported volume trends likely benefitted from