ITC (ITC IN) – Q3FY26 Result Update – Cigarette excise shadows recovery in FMCG/ Paperboard – REDUCE
Published on 29 Jan 2026
ITC reported ~6.8% volume growth in Cigarettes, while FMCG and Paperboard segments delivered higher QoQ margins. FMCG sales were supported by strong demand following GST cuts, with Biscuits and Noodles showing robust traction. The Paperboard business was affected by a planned shutdown, suggesting that underlying growth would have been stronger. We remain cautious on the Cigarettes segment, as we expect a 22–50% price increase due to new excise rates which could impact volumes and profitability in the near term.
However, we expect ITC to do well in other category given 1) likely decline in wood prices and benefits of MIP imposition in paper board 2) expected further recovery in demand and margins in FMCG business led by favorable macro policies. FMCG business displayed resilience with Digital First & Organic portfolio growing by 60% in Q3. We estimate 5.3% EPS CAGR over FY26-28 (Ex century paper). We assign SOTP based TP of Rs314 based on Sept27 (Rs348 earlier) Retain reduce as cigarette excise impact is yet to play out.
