ITC stock under pressure after Q4 results — BUY, HOLD or SELL?

Shares of ITC Limited declined in early trade on Friday after the company reported a sharp fall in standalone net profit for the March quarter of FY26, even as revenue and operational performance remained stable.

At around 9:30 AM, ITC shares were trading at Rs 306.25, down Rs 1.85, or 0.60 per cent.

The FMCG-to-cigarettes major reported a 74 per cent decline in standalone net profit at Rs 5,113 crore for Q4FY26, compared with Rs 19,562 crore in the year-ago quarter. However, profit from continuing operations rose 5 per cent year-on-year to Rs 5,113.36 crore from Rs 4,874.93 crore a year earlier.

Revenue from operations increased 17 per cent YoY to Rs 21,695 crore during the quarter, compared with Rs 18,495 crore in the corresponding period last year.

EBITDA grows 7 per cent, margins contract

ITC’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose 7 per cent to Rs 6,426 crore in Q4FY26, against Rs 5,987 crore in the same quarter last fiscal.

However, EBITDA margin contracted to 29.62 per cent from 32.37 per cent YoY.

The company said its standalone performance reflected resilient growth despite supply chain disruptions and logistical challenges arising from the ongoing West Asia conflict. Gross revenue rose 17.5 per cent annually, supported by robust 15 per cent growth in the FMCG segment.

ITC also said its paper business continued to improve, with profits rising 21 per cent YoY and 24 per cent sequentially.

The company noted that the agribusiness segment was impacted by timing differences due to deferred sales amid the geopolitical conflict. Excluding the agri business, EBITDA growth stood at 9 per cent YoY.

For the full year FY26, ITC said gross revenue increased 10.1 per cent annually, while EBITDA grew 4.9 per cent YoY.

On a consolidated basis, the company reported 17.1 per cent growth in Q4 gross revenue and a 6.9 per cent rise in EBITDA.

Analysts remain divided on stock outlook

Global brokerage firms maintained mixed views on ITC after the Q4 earnings announcement, with several firms cutting target prices amid concerns over the impact of recent cigarette tax hikes.

Jefferies maintained a “Hold” rating on ITC and cut the target price to Rs 350 from Rs 400. The brokerage said Q4 performance was supported by strong cigarette business growth, but added that the full impact of higher cigarette taxes will likely be visible from Q1FY27.

Jefferies also said partial price hikes and pressure on volumes and margins could keep the stock range-bound in the near term.

Nomura maintained a “Reduce” rating and lowered the target price to Rs 300 from Rs 318.

UBS retained its “Buy” rating on the stock, though it reduced the target price to Rs 380 from Rs 395.

Meanwhile, CLSA maintained its “Accumulate” rating and slightly raised the target price to Rs 394 from Rs 390. CLSA said cigarette EBIT growth of 7.2 per cent in Q4FY26 was ahead of expectations, while non-cigarette FMCG revenue growth of 15 per cent also exceeded consensus estimates.

Citi maintained a “Sell” rating with a target price of Rs 290. The brokerage estimated cigarette volumes declined around 7 per cent during the quarter and flagged concerns around demand slowdown, price elasticity, and potential downtrading to illicit products following successive tax hikes.