ITC Q1 FY26 Results Preview: Core Business Growth in Focus

ITC will announce its Q1 FY26 results on July 16, 2025, and this time, the numbers will reflect the company’s new structure. With the hotel's business now demerged into a separate listed entity, investors will be watching how ITC’s core segments — FMCG, Cigarettes, Agribusiness, and Packaging — are performing in the new fiscal year.

Hotels Business: Demerged, but Still a Key Watch

Although the hotel segment is no longer part of ITC’s core revenue reporting (post-demerger in January 2025), it remains relevant for investors since ITC retains a 40 per cent stake in ITC Hotels.

The hospitality segment has shown strong momentum:

• High occupancy (79 per cent) and strong average room rates (Rs 15,000) in Q4 FY25.
• New properties, including ITC Ratnadipa in Colombo, added scale and profitability.
• Strong demand from leisure travel and business conferences supported growth.
• Analysts expect ~12 per cent revenue growth in FY26 with solid margins (35–40 per cent).

Investor Insight: While ITC Hotels won’t contribute to ITC Ltd’s Q1 revenue, its performance still matters for overall shareholder value. The 40 per cent stake remains on the books.

FMCG (Non-Cigarettes): Steady Growth with Rural Push

ITC’s FMCG segment — covering food, personal care, hygiene, and more — is expected to post mid-single-digit growth in Q1. The company’s deep rural reach and wide portfolio helped it weather mixed demand conditions this quarter.

Key trends:

• Staples, hygiene, and personal care products supported growth.
• Unseasonal rains impacted summer-focused items (e.g., beverages, ice creams).
• Rural markets performed better than urban ones, thanks to a strong rabi harvest and monsoon onset.
• Competitive pressure from regional players remains a challenge in snacks, biscuits, and stationery.

Margins are likely to hold up, thanks to:

• Stable commodity prices (palm oil, wheat, crude oil).
• Improved cost efficiency and supply chain management.

Investor Insight: Expect revenue growth of 5–6 per cent, with margins steady around 11–12 per cent. Rural strength and demand for essentials are key positives.

Cigarettes: Stable Performer with Premium Boost

The cigarettes business, ITC’s largest profit contributor, is expected to report another stable quarter.

What’s working:

• Volume growth supported by no tax hikes in the Union Budget.
• Premium products and capsule filters are driving higher realisations.
• Good rural demand and improved distribution post-COVID.

The segment reported 7 per cent revenue growth in Q1 last year, and a similar 5–8 per cent rise is expected this time. Margins remain among the highest in the industry.

Investor Insight: Cigarettes continue to be the cash engine for ITC, helping fund growth in other areas. Any commentary on volume growth or regulatory changes will be key.

Paperboards & Packaging: Early Signs of Recovery

After facing headwinds in FY25, ITC’s paper and packaging segment is showing signs of stabilising.

Challenges last year included:

• Low-cost imports from China and Indonesia.
• High input costs (wood, ocean freight).
• Weak domestic demand.

Recent developments suggest a possible turnaround:

• Revenue grew 5.6 per cent in Q4 FY25, hinting at recovery.
• ITC has upgraded its capacity and is focusing on value-added paper.
• Anti-dumping duties on cheap imports, if implemented, could support domestic pricing.

Investor Insight: Don’t expect a full-blown revival yet. Q1 may be flat to slightly positive YoY, but longer-term growth looks more promising.

Agribusiness: Slowing After Last Year’s Jump

In Q1 last year, agribusiness was ITC’s fastest-growing segment. This quarter, growth may moderate due to a high base and export restrictions.

Key drivers:

• Wheat and tobacco exports continue to support the topline.
• Value-added agri products (e.g., spices, coffee) are being scaled up.
• Monsoon progress supports farm income and procurement.

However:

• Government curbs on rice/wheat exports may limit trading opportunities.
• Margins remain sensitive to crop price volatility and logistics costs.

Investor Insight: Expect lower double-digit growth (vs 22 per cent last year) with improving profitability due to mix shift toward value-added products.

What Else to Watch in Q1

• Results will exclude hotel revenue, so headline numbers may appear lower YoY — this is due to accounting, not a business slowdown.
• Monsoon boost helps both agribusiness and rural FMCG demand.
• Stable input costs (vs last year) support margins across segments.
• Festive season stocking may give a bump to paper and agri volumes.
• Any guidance on premiumization, rural sales trends, and hotel stake monetisation will matter.

Bottom Line

ITC enters FY26 with a leaner, focused business model after the hotels demerger. Q1 is expected to be:

• Stable-to-strong for Cigarettes and FMCG
• Recovering for Paper & Agribusiness
• Robust for Hotels (tracked separately)

July 16 Q1 results will set the tone for FY26. For investors, this quarter is about understanding how ITC will drive growth in a post-conglomerate structure, and whether it can maintain strong cash flows and margin discipline across segments.

For detailed financial information, visit our stock page- ITC Hotel

Disclaimer: This is not a stock recommendation. This story was created with the assistance of artificial intelligence and has been reviewed by human experts for accuracy and is intended for informational purposes only. Please take it with a grain of salt and conduct your own research or consult a financial advisor before making any investment decisions.