18.45% Profit Drop: ITC Q2 Results 2026 and Why Shares Fell
ITC's Q2 results 2026 show an 18.45% profit fall as cigarette taxes bite, while FMCG and paper grew fast. Here is what the numbers say and why the stock is 47% below its peak.
ITC hit a record ₹499 a share in September 2024. It has since lost 47% from that peak, and ₹1.72 lakh crore of market value has disappeared this year alone (Mint).
On Monday evening, ITC's Q2 results 2026 added another chapter. Consolidated net profit fell 18.45%. Yet the soaps-to-biscuits side of the business grew at its fastest pace in years.
Quick answer
- ITC's consolidated net profit fell 18.45% to ₹4,229.33 crore in the July-September quarter, from ₹5,186.55 crore a year ago.
- Cigarette taxes are the main reason: operating profit from cigarettes fell more than 27% to ₹3,813 crore.
- FMCG revenue rose 19%, paperboards revenue rose 36%, and the agri business grew 12%.
- The stock is down 34% so far in 2026, with market value at ₹3.33 lakh crore on Monday's close.
This is general education about a company's published results, not a recommendation to buy, sell or hold ITC shares; check with a SEBI-registered adviser before you invest.
What were ITC's Q2 results 2026?
ITC reported a consolidated net profit of ₹4,229.33 crore for the September quarter, down 18.45% year on year, even as revenue from operations rose 43.85% to ₹30,578.4 crore.
Those headline figures come from Mint. A year earlier, revenue from operations was ₹21,255.86 crore.
You may also see a different profit number. Business Standard reports profit attributable to ITC's owners at ₹4,168.40 crore, down 18.7 per cent. Both are correct; they measure slightly different things.
There was one bright spot against expectations. Net revenues of ₹20,269 crore and that profit figure both came in marginally above the Bloomberg consensus of ₹20,111 crore and ₹4,136 crore, per Business Standard.
Why did ITC's profit fall?
ITC's profit fell mainly because of steep new taxes on cigarettes, its biggest earner, which cut legal sales volumes and pushed cigarette operating profit down more than 27%.
The tax increase took effect on February 1, 2026. GST on cigarettes went from 28 per cent of the transaction value to 40 per cent of the retail sale price, and excise duty was raised sharply (Business Standard). This is the second straight quarter the tax hit ITC's bottom line.
ITC's own statement calls it an "unprecedented increase in tax" and says legal industry volumes remain under pressure (ITC). The company is worried about smokers moving to smuggled brands, and points to a sharp rise in seizures of smuggled cigarettes across the country.
Input costs added to the pain. Mint notes that prices of sugar, copra and palm oil have surged, hurting the food business.
There is a small sign of repair. Cigarette pre-tax profit rose 7.3 per cent from the previous quarter, according to Business Standard, as ITC launched new variants and reworked its portfolio.
How did ITC's other businesses do?
Every non-cigarette segment grew: FMCG revenue rose 19%, paperboards and packaging revenue rose 36%, and the agri business grew 12%, according to ITC's results statement.
Source: ITC media statement, Mint
FMCG revenue growth hit a 14-quarter high, with biscuits, snacks, noodles, spices, salt, frozen snacks, homecare and notebooks growing 20%+ (ITC). Segment EBITDA margin expanded over 50 bps despite rising input costs.
Non-cigarette FMCG pre-tax profit stood at ₹576.69 crore, up 31.4 per cent, says Business Standard.
The paper business staged a recovery. Segment PBIT rose 48%, helped by better demand, price increases and the Century Pulp & Paper acquisition completed on 1st August 2026. Agri was held back by West Asia disruptions and delayed customer orders.
Smaller bets are scaling up too. The fresh food business grew GMV 53% and crossed an annual revenue run rate of Rs. 320 cr., with 80+ cloud kitchens.
What most guides miss: the headline revenue jump of 43.85% and Business Standard's net revenue growth of 3.9 per cent describe the same quarter. A gap that wide is a reminder to read net revenue and segment profit, not just the top line, when a company's tax costs change sharply.
Why are ITC shares falling in 2026?
ITC shares are down 34% this year because the cigarette tax and rising input costs have hit profits two quarters in a row, pushing the stock to multi-year lows.
The slide started early. The stock fell 20% in January alone and touched a three-year low in August before a modest recovery, reports Mint.
For a blue-chip stock that many families hold for steady dividends, a 47% fall from the peak is rare. It shows how much one tax decision can move a company that earns most of its profit from a single product.
What should ordinary investors take from these Q2 results?
The main lesson is about concentration: when most profit comes from one product, a single policy change can outweigh strong growth elsewhere for several quarters.
ITC's non-cigarette businesses are growing, but the cigarette segment still brings in the bulk of the group's earnings, as Mint notes. Until the other segments are large enough, cigarette profit will keep setting the tone.
Some practical habits for any results season:
- Compare profit year on year and quarter on quarter. ITC's profit fell 5.1 per cent from the previous quarter too.
- Check whether results beat or missed estimates, not only whether profit rose.
- Look at your total exposure. If one stock or one sector is a large share of your portfolio, a diversified mutual fund can spread that risk.
FAQs
What is ITC's Q2 net profit for 2026?
ITC reported a consolidated net profit of ₹4,229.33 crore for the July-September quarter, down 18.45% from ₹5,186.55 crore a year earlier. Profit attributable to owners was ₹4,168.40 crore.
Why did ITC's profit fall in Q2?
Higher cigarette taxes from February 1, 2026 hurt legal cigarette volumes, and cigarette operating profit fell more than 27%. Higher input costs also hurt the food business.
Did ITC beat estimates in Q2?
Marginally. Net revenue and attributable profit came in slightly above the Bloomberg consensus, according to Business Standard.
How much has ITC's share price fallen?
The stock is down 34% so far in 2026 and 47% from its record high of ₹499 in September 2024, per Mint.
Expert review: pending.
Investments in the securities market are subject to market risks. This post is for education only and is not investment advice; read all related documents and consult a SEBI-registered adviser before investing.
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