ITC Limited reported a standalone net profit of ₹5,113.36 crore for the quarter ended March 31, 2026 — ahead of the ₹4,900 crore market estimate and up 4.9% year-on-year from ₹4,874.93 crore in Q4 FY25. Revenue from operations surged 17.3% year-on-year to ₹21,694.67 crore from ₹18,494.55 crore, driven by strong performance across cigarettes, FMCG, and hotels. The headline, however, is accompanied by a significant EBITDA margin compression that markets will scrutinise closely.
Q4 FY26 key numbers
Total income for the quarter was ₹22,347.42 crore against ₹19,289.94 crore in Q4 FY25 — a 15.9% increase. EBITDA came in at ₹6,425 crore against ₹5,986 crore in Q4 FY25 — a 7.3% year-on-year increase. However EBITDA margin compressed sharply to 29.62% from 32.37% in Q4 FY25 — a contraction of 275 basis points that is the most significant operational concern in the result.
Profit before exceptional items and tax was ₹6,691.86 crore against ₹6,417.07 crore in Q4 FY25 — a 4.3% increase. An exceptional item gain of ₹2.06 crore — negligible — produced profit before tax of ₹6,693.92 crore. Tax expense was ₹1,580.56 crore including a deferred tax credit of ₹79.99 crore, producing the ₹5,113.36 crore net profit.
The excise duty spike — the key to reading this result
The most important line in the Q4 expense statement is excise duty — ₹5,644.20 crore against ₹1,245.85 crore in Q4 FY25, a more than four-fold increase. This dramatic jump is the primary driver of both the revenue surge and the EBITDA margin compression and requires careful interpretation.
ITC reports gross revenue including excise duty and then nets it out. The Q4 FY26 gross revenue from sale of products and services was ₹21,463.36 crore against ₹18,266.66 crore — but a significant portion of the apparent revenue growth reflects higher excise duty pass-through on cigarettes following budget changes, rather than pure volume or price growth in the underlying business. The EBITDA margin compression from 32.37% to 29.62% is a direct consequence of this structural change in how cigarette revenues and duties are reported.
Full year FY26 performance
For the full financial year ended March 31, 2026, standalone revenue from operations grew 9.9% year-on-year to ₹81,640.11 crore from ₹74,238.13 crore in FY25. Full-year net profit from continuing operations was ₹20,286.42 crore against ₹20,093.29 crore in FY25 — a 1% increase. Total income for FY26 was ₹84,927.29 crore against ₹77,693.10 crore in FY25. Full-year profit before exceptional items and tax was ₹26,951.47 crore against ₹26,002.30 crore — a 3.6% improvement. The full-year exceptional item was a charge of ₹183.87 crore.
Full-year cost of materials consumed rose to ₹25,939.49 crore from ₹23,440.61 crore — a 10.7% increase reflecting input cost inflation across tobacco leaf, paper, and FMCG ingredients. Full-year excise duty was ₹9,656.33 crore against ₹4,912.55 crore in FY25 — nearly doubling, again reflecting the cigarette duty structure change.
What the margin compression means
The EBITDA margin contraction from 32.37% to 29.62% in Q4 — 275 basis points — will be the primary question on the concall. If the compression is entirely attributable to the excise duty reporting change rather than underlying business deterioration, the operative margin on the core cigarette business may be more stable than the headline suggests. If it reflects genuine pressure on cigarette pricing power, input cost escalation in non-cigarette FMCG, or hotel segment costs — that is a different and more concerning story.
ITC’s diversified business — spanning cigarettes, packaged foods under Sunfeast and Aashirvaad, hotels, paperboards, and agribusiness — gives it multiple levers to manage margins. The cigarette business remains the profit engine, but the FMCG segment’s scale and the hotels segment’s post-pandemic recovery are increasingly material contributors that the margin story needs to account for separately.
This article is for informational purposes only and does not constitute investment advice. Please consult a qualified financial advisor before making any investment decisions.