ITC Ltd Q2 FY27 Results Analysis: PAT Falls 18%, EBITDA Margin Compresses 650 bps

Cofacto Research Published November 02, 2026 4 min read

Neutral

ITC Ltd's Q2 FY27 numbers came in mixed, with revenue of Rs. 30,578.40 Cr (+43.86% YoY) and PAT growth of -18.46% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quick Details

Results date	November 02, 2026
Revenue (Q2)	Rs. 30,578.40 Cr (+43.86% YoY)
PAT (Q2)	Rs. 4,229.33 Cr (-18.46% YoY)
EBITDA margin	28.54% (-650 bps YoY)
EPS (Q2)	Rs. 3.32 (-18.83% YoY)

Quarter Snapshot

The 43.86% revenue headline is an excise pass-through artifact; underlying net revenue grew 4.29% while PAT fell 18.46% YoY on the cigarette tax reset, with ex-excise EBITDA margin down 650 bps YoY. Sequential recovery is visible — cigarette PBIT margin improved to 24.55% from 21.72% and FMCG-Others margin expanded to 10.01% — while the CPP acquisition was cash-funded with borrowings cut to Rs.242.93 crore. No FY-level numeric guidance exists in the record, so no guidance beat or miss is computable; Q3 offers the cleaner read of the reset base.

Q2 FY27 Expectations vs Results

Driver	What happened	Verdict
Cigarette decline "may moderate from Q1's −25% net revenue / −35% segment results rather than deepen"	net-rev proxy −23.67%; results −27.23% (SA) vs −35% in Q1	Played out
"FMCG-Others should stay ahead"	revenue +19.13%, results +31.45%	Played out
Margin compression "partial rather than severe"	EBITDA margin 10.01% vs 9.79% LY	Played out
"Gross-revenue growth again overstates the underlying top line"	+43.86% headline vs +4.29% net; excise delta Rs.8,555.54 cr	Played out
"Agri faces the West Asia trade-disruption overhang"	Agri +12.70% revenue, +14.29% results — better	Contradicted
Paper: "first partial CPP quarter" on MIP tailwind	+35.90% revenue, +50.68% results	Played out
"Finance cost continues to rise off a small base"	+90.87% (Rs.38.27 cr); H1 Rs.78.05 cr vs Rs.36.52 cr	Played out
September price increases "claw back some of the Q1 hit"	cigarette margin 24.55% (SA) vs 21.72% Q1; results +14.13% QoQ	Played out

Read our full results preview.

Management Guidance vs Delivery

What management said	Where	What happened	Verdict
FMCG-Others EBITDA margin ~10% trajectory (Q1: 10% ex-Sresta; FY26: 10.0%)	Q1 FY27 media statement / FY26 presentation	10.01% (EBITDA Rs.722.86 cr)	Met
"Prices are expected to moderate going forward" (paper wood)	Q4 FY26 media statement	Paper results +50.68% YoY, margin 9.06% vs 8.17%	On Track
Cigarettes "tracking well in line with internal plans"	Q1 FY27 media statement	Results −25.95% YoY but QoQ recovery (SA +14.13%); net-rev proxy −23.67% vs Q1's −25%	On Track
Leaf tobacco demand "expected to be subdued"	Q4 FY26 media statement	Agri results +14.29% YoY; leaf-tobacco split not disclosed	Too Early

Key Numbers, Quarter by Quarter

Metric	Q2 FY26	Q1 FY27	Q2 FY27
SA cigarette net-rev proxy YoY %	—	−25.0	−23.67
Cigarette PBIT margin %	60.08	21.72	24.55
FMCG-Others EBITDA margin %	9.79	9.44	10.01

Key Investment Insights

Key Positives

Net revenue (ex-excise) grew 4.29% YoY to Rs.20,121.24 crore and 5.90% QoQ; the 43.86% headline is an excise pass-through artifact (Rs.8,555.54 crore excise delta)
FMCG-Others results grew 31.45% YoY with segment EBITDA margin expanding to 10.01% from 9.79% LY despite edible-oil/soap-noodle inflation
Paperboards segment results grew 50.68% YoY with margin at 9.06% vs 8.17% LY, plus first ~2 months of Century Pulp and Paper consolidation
Agri business revenue grew 12.70% and results 14.29% YoY as the West Asia disruption faded; results +44.19% QoQ
Standalone cigarette PBIT margin recovered to 24.55% from 21.72% in Q1, with results +14.13% QoQ and net-revenue proxy decline moderating to −23.67% from −25%
Borrowings reduced to Rs.242.93 crore from Rs.2,186.22 crore; H1 FCF of Rs.7,276.99 crore funded Rs.3,994.28 crore of acquisitions and Rs.10,026.20 crore of dividends
ETR stable at 25.73% vs 25.68% LY with no tax drag; deferred tax only 3.8% of the charge

Risk Factors

Consolidated PAT declined 18.46% YoY to Rs.4,229.33 crore; normalized PAT declined 17.04%
Ex-excise EBITDA margin compressed 650 bps YoY to 28.54% following the February 1, 2026 cigarette tax increase
Cigarette segment result fell 25.95% YoY to Rs.4,044.49 crore with PBIT margin at 24.91% vs 58.02% LY
Standalone cigarette net-revenue proxy fell 23.67% YoY, reflecting the tax-driven demand/pricing reset
Finance costs rose 90.87% YoY to Rs.38.27 crore and D&A rose 12.83% on CPP consolidation
H1 dividends paid of Rs.10,026.20 crore exceeded H1 PAT-to-owners of Rs.8,562.53 crore, reducing other equity by Rs.1,105.68 crore