ITC (ITC IN) – Q1FY27 Result Update – Worst seems over, however expect prolonged recovery – Downgrade to ‘HOLD’
Published on 31 Jul 2026
We cut FY27/28 EPS by 15.0/10.3% and target price to Rs291 (Rs302 earlier). ITC reported a decline of ~5% in cigarette volumes and 35.1% in EBIT, which resulted in 27.1% decline in 1Q27 PAT. Cigarette business is expected to show slow recovery given that ITC is still absorbing excise increase in its P&L. we see little scope of positive volumes in next 2/3 quarters given big market disruption. FMCG business is showing decent growth, however 2Q might show some margin pressure due to west Asia impact. Paper business aided by MIP and softer wood prices, is showing improvement in profitability. We now estimate a decline of 13% in FY27 PAT and 15.2% growth in FY28. Although worst seems over, we expect recovery to be gradual and delayed. However, downside seems limited given 30% correction in stock price sinceDec25, 16.7xFY28 PE and 5% dividend yield. We upgrade the stock from reduce to Hold.
