ITC profit falls 18.46% as costs outpace revenue growth
Margins improved sequentially as revenue grew faster than expenses, but remained well below last year's level.
Filed 02 Nov 2026, 18:20 IST · after market close · ITC Ltd (ITC)
Key takeaways
- Consolidated net profit fell 18.46% YoY to Rs 4,229.33 cr as expenses grew +14.19%, far faster than revenue at +3.93%.
- Operating margin recovered 0.75 percentage points QoQ to 27.85%, but remained 6.48 percentage points below Q2FY26.
- Other income contributed 10.16% of pre-tax profit, while the 25.73% tax rate was almost unchanged YoY and did not materially cushion the earnings decline.
Price around the results
Revenue growth did not keep pace with the cost base
Consolidated revenue grew +3.93% YoY to Rs 20,268.63 cr, while expenses rose +14.19%. That gap cut operating profit by -15.68% and pulled operating margin down 6.48 percentage points to 27.85%. Sequentially, revenue grew +6.04% and expenses rose +4.95%, allowing operating profit to increase +8.96%.
Sequential margin recovery came with lower other income
Operating margin improved 0.75 percentage points QoQ because revenue grew faster than expenses. However, other income fell -49.57% QoQ to Rs 578.66 cr, and the tax rate rose 2.66 percentage points to 25.73%, so net profit declined -6.20% despite the improvement in operating profit. Other income still accounted for 10.16% of pre-tax profit, making it a material part of reported earnings.
Margin remains below the FY26 peak and above sector median
The 27.85% operating margin was higher than Q1FY27's 27.10% but well below 38.85% in Q4FY26 and 34.33% in Q2FY26 and Q3FY26. Among 38 Fast Moving Consumer Goods companies that had reported the same quarter, ITC's margin was 15.59 percentage points above the sector median of 12.26%. YoY interest expense rose +90.87%, while the tax rate was broadly stable, changing by just 0.05 percentage points.
No immediate market reaction after the post-close filing
ITC filed its consolidated results after market close, so there was no current-session reaction to report. In the eight prior result reactions, the stock rose seven times and fell once, with a median absolute move of 2.14%. That history provides context for the next trading response without changing the quarter's earnings picture.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹20,269 cr | ₹19,114 cr | +6.04% | +3.93% |
| Other income | ₹579 cr | ₹1,148 cr | -49.57% | -21.68% |
| Expenses | ₹14,624 cr | ₹13,934 cr | +4.95% | +14.19% |
| Operating profit | ₹5,645 cr | ₹5,181 cr | +8.96% | -15.68% |
| Operating margin (%) | 27.85% | 27.10% | — | — |
| Interest | ₹38 cr | ₹40 cr | -3.80% | +90.87% |
| Depreciation | ₹491 cr | ₹428 cr | +14.70% | +12.83% |
| Profit before tax | ₹5,695 cr | ₹5,861 cr | -2.84% | -18.40% |
| Tax | ₹1,465 cr | ₹1,352 cr | +8.37% | -18.24% |
| Net profit | ₹4,229 cr | ₹4,509 cr | -6.20% | -18.46% |
| EPS (₹) | ₹3.32 | ₹3.51 | -5.41% | -18.83% |
Operating margin of 27.85% compares with a Fast Moving Consumer Goods sector median of 12.26% across 38 peers that have reported Q2FY27.
What to watch
- Whether operating margin holds above 27.85% after the sequential recovery.
- Whether expenses continue to grow faster than revenue, as they did by +14.19% versus +3.93% YoY.
- Whether other income remains a material contributor after accounting for 10.16% of pre-tax profit.