ITC Reports Quarterly Profit Decline as Cigarette Tax Hike Impacts Margins

FMCG major ITC reported a decline in its quarterly profit as increased taxation on cigarettes continued to put pressure on the company’s margins.

The cigarette business remains one of ITC’s largest revenue contributors, and recent tax changes have added challenges to profitability despite growth in other business segments.

According to reports, ITC posted a sharp year-on-year decline in net profit for the March quarter, although analysts noted that last year’s numbers had been significantly boosted by a one-time gain linked to the demerger of the company’s hotel business.

Excluding such factors, the company’s operational performance remained under pressure due to higher taxation and cost concerns.

The recent increase in cigarette taxes has raised concerns around pricing, sales volumes, and demand. Industry observers believe companies may need to pass on a portion of the additional tax burden to consumers, which could impact cigarette sales in the short term.

Despite challenges in its tobacco segment, ITC’s diversified businesses including packaged foods, FMCG products, agribusiness, and paperboards continued to provide support.

Market analysts are closely monitoring the company’s long-term strategy and its efforts to reduce dependence on the cigarette segment.