ITC Q3FY26 Results: Profit Flat, Labour Code Impact

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ITC Reports ₹4,931 Crore Profit in Q3FY26, Navigates Tax Headwinds

A diversified conglomerate, ITC Limited, announced a consolidated net profit of ₹4,931.19 crore for the third quarter of fiscal year 2025-26, despite facing challenges from a one-time provision related to new labor codes and a difficult comparison to the previous year’s extraordinary gains.

Despite the reported profit, the figure fell short of the ₹5,232 crore consensus estimate from Bloomberg analysts. However, a company spokesperson emphasized that profit before exceptional items provides a more accurate reflection of the company’s underlying operational strength, reaching ₹7,108.66 crore – an 8.8 percent increase year-over-year.

Did you know? – ITC’s cigarette business remains a significant revenue driver, contributing approximately 44.6% to the company’s total revenue in Q3FY26.

Revenue Growth and Segment Performance

ITC’s consolidated gross revenue for the quarter reached ₹21,706.64 crore, a 6.7 percent increase compared to ₹20,349.96 crore in the same period last year. Net revenue also exceeded expectations, totaling ₹20,047 crore against a Bloomberg estimate of ₹19,030 crore. While net revenue experienced a sequential rise of 2.8 percent, net profit saw a 3.8 percent decrease.

Pro tip – ITC’s focus on premiumization within its FMCG segment is a key strategy for driving higher margins and revenue growth.

The company highlighted strong performance across its diverse business segments. Revenue from the cigarette business, a core component of ITC’s portfolio, grew by 8.2 percent year-on-year to ₹9,681.08 crore, with pre-tax profit increasing 5.7 percent to ₹5,487.29 crore.

Though, ITC cautioned that recent changes to goods and services tax (GST) and excise duty rates, effective February 1st, have resulted in a significant increase in the tax burden on cigarettes. “Such a steep increase will further encourage illicit trade and cause immense hardship and losses for millions of farmers, micro, small and medium enterprises, retailers, local value chains nurtured by the industry, and the exchequer,” according to a company release.

reader question – Analysts are watching ITC’s investments in digital initiatives to see if they will substantially boost growth in the coming quarters.

The non-cigarette fast-moving consumer goods (FMCG) segment demonstrated robust growth, with revenue climbing 12.6 percent year-on-year to ₹6,109.58 crore. This growth was fueled by strong performance in the company’s premium product lines, new-generation distribution channels, and digitally-driven offerings. Pre-tax profit in this segment surged 39.8 percent to ₹448.29 crore.

Other segments also contributed to the overall positive performance. The agribusiness segment saw revenue increase by 6.4 percent to ₹3,859.04 crore,driven by value-added agricultural products and leaf tobacco. Revenue from the paperboard, paper, and packaging segment rose 2.7 percent to ₹2,203.03 crore, even though pre-tax profit declined 4.2 percent to ₹188.77 crore due to planned maintenance shutdowns.

Dividend Proclamation and Future Outlook

The board of directors has recommended an interim dividend of ₹6.5 per share for the financial year ending March 31, 2