ITC: Will higher cigarette taxes continue to hurt earnings?

ITC Limited (

) is announcing its Q2 FY27 results today, 2 November 2026. The biggest concern is the impact of higher cigarette taxation on volumes and profitability, while the FMCG business could provide some support. What the market expects Consolidated revenue: approximately ₹18,900–20,510 crore. Net profit: approximately ₹4,550–4,700 crore, potentially down 8–11% year-on-year. Cigarette volumes could decline approximately 7–10%. FMCG performance is expected to provide partial support. Why this matters Cigarettes remain an important profit contributor for ITC. Higher taxes can affect affordability, volumes and margins. The performance of FMCG, hotels and agribusiness will be important in assessing how diversified earnings can offset cigarette-business weakness. What to monitor Cigarette volume growth and pricing impact. FMCG revenue growth and margins. Hotel business contribution. Consolidated EBITDA and cash generation. Management commentary on taxation and demand. My analytical view The key question is whether ITC can protect profitability while adapting to higher cigarette taxes. Investors should focus on segment-level performance rather than consolidated revenue alone. A weak quarter may already be partly anticipated by the market, so expectations and management commentary will matter. Risk: Further taxation, volume contraction, input-cost inflation and competitive pressure could weigh on earnings. SEBI RA Disclaimer: Umang Rajesh Bhutada is a SEBI-registered Research Analyst (INH000023001). This content is for educational and informational purposes only and is not investment advice. Securities investments are subject to market risks. Please consult a qualified financial professional before making investment decisions.