India's ITC profit drops as cigarette tax hike hits core business (updated)

ITC

31/07/2026 12:14

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July 31 (Reuters) - Indian conglomerate ITC ITC.NS reported a 27% slump in quarterly profit on Friday as fresh cigarette tax hikes dragged down earnings in its core cigarettes business.
The world's most populous country earlier this year imposed an excise duty on cigarettes between 2,050 and 8,500 rupees per thousand sticks, in addition to a 40% consumption tax — a move analysts called "a negative surprise for the industry."
ITC, known for cigarette brands such as Gold Flake and Classic as well as consumer goods products, reported a profit of 35.79 billion rupees ($375.24 million) in the first quarter ended June 30.
Total expenses soared 50% to 228.29 billion rupees.

        ITC's staggered price hikes helped offset part of the tax increase, but higher taxes still dragged down cigarette profit before finance costs, unallocated corporate expenses and taxes down by a third.
Overall revenue rose 28% to 269.43 billion rupees from 210.7 billion rupees, helped by a 12% growth in its non-cigarette consumer goods business, while peers Tata Consumer Products TACN.NS and Nestle India NEST.NS also reported revenue growth.
Shares closed 1.4% lower at 281 rupees, making ITC one of the top 10 losers on India's benchmark Nifty 50 .NSEI index and extending the stock's decline so far this year to roughly 30%.

($1 = 95.3800 Indian rupees)

 (Reporting by Praveen Paramasivam in Chennai; Editing by Sonia Cheema)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))