ITC

sustained healthy performance in core segments in a tepid consumption environment, though margins remained under pressure. Gross cigarette sales grew 8% YoY (est. 6%) and volume growth was ~6% (vs. est. 5%). The premium cigarette segment continued to outperform. Cigarette EBIT grew by 4.6% YoY (est. 5.2% YoY). EBIT margin contracted 190bp YoY to 57.6% (est. 59%), impacted by the sharp escalation in the leaf tobacco cost. FMCG segment sales grew 5.5% YoY (ex-notebook 8.6%). Notebook industry continued to operate under deflationary conditions, while unseasonal rains during the quarter impacted beverages sales. Growth was driven by Staples, Dairy, Premium Personal Wash, Homecare and Agarbattis. EBIT declined 17% YoY. EBIT margin contracted by 180bp to 6.9% (in line).FMCG performance was below par in FY25, but with demand recovery, we expect improving trends. We reiterate our BUY rating on ITC with our SOTP-based TP of INR500 (implying 26x Jun’27E P/E).