As India steps deeper into FY26, ITC Ltd—one of the country’s leading consumer goods giants—paints a promising picture for the domestic consumption landscape. With macroeconomic levers aligning favorably, the company forecasts sustained growth in spending across rural and urban markets, driven by a cooling inflation cycle, potential interest rate cuts, and robust government capital expenditure.
Consumption on an Upswing: A Confluence of Positives
ITC anticipates that India’s consumption momentum will continue to accelerate in the months ahead. The confluence of a good monsoon forecast and policy tailwinds—such as recent income tax cuts and RBI’s liquidity support—are expected to inject fresh energy into both rural and urban demand. Lower inflation is expected to free up household budgets, while government investments and capex front-loading could create a multiplier effect across industries.
This sentiment echoes industry heavyweight Hindustan Unilever Ltd (HUL), whose leadership recently called this a “good moment” for the consumer goods sector, citing strong reservoir levels and a solid agricultural outlook.
Spectacular Profit Surge Boosted by Hotel Demerger
ITC posted a staggering
289% increase in net profit in the March quarter, soaring to ₹19,561.57 crore, largely fueled by exceptional gains from the
demerger of its hotels business. Excluding the one-time impact, the adjusted net profit stood at ₹4,875 crore, representing modest year-on-year growth of 0.77%.
While a Bloomberg poll had pegged expectations higher, the results came largely in line with institutional forecasts. Revenues rose 9.4% to ₹18,494.06 crore in Q4 FY25, compared to ₹16,907.18 crore in Q4 FY24.
Expenses, meanwhile, grew 12.7%, signaling margin pressure that the company partly mitigated through strategic cost optimization and pricing action.
FMCG Performance: Resilient Amidst Intense Competition
ITC’s FMCG segment demonstrated resilience despite challenging demand dynamics and intense competition from regional players. Revenues in this segment rose 3.6% to ₹5,494.63 crore, though profits declined by 28% due to elevated input costs.
Key growth categories included
atta, spices, snacks, dairy, frozen foods, and homecare, with over 100 new product introductions over the fiscal year. However, segments such as
noodles, soaps, biscuits, and Classmate notebooks saw heightened price-based competition.
The company navigated input cost inflation—particularly in edible oil, wheat, potato, and cocoa—through supply chain agility and portfolio premiumization.
Cigarettes, Agriculture, and Paperboards: Mixed Fortunes
ITC’s cigarette business delivered a
6% rise in quarterly revenue, with volumes increasing 5% year-on-year, slightly surpassing expectations. The segment benefited from improved product mix and robust cost controls, despite pressures in leaf tobacco pricing.
The
agriculture segment registered a healthy 18% growth in revenue, while the
paperboards and packaging business remained under pressure due to cheap global imports and rising domestic wood costs. Nonetheless, ITC is actively engaging with policymakers for industry safeguards and has ramped up plantation efforts to ease long-term supply concerns.
FY25 Snapshot: A Strong Foundation for Future Growth
- Annual Net Profit: ₹35,196 crore (up 72.3% YoY, including discontinued operations)
- Revenue: ₹74,236.07 crore (up 10.31% YoY)
- Earnings Per Share: ₹16.07
- Total Dividend: ₹14.35 per share for FY25
Looking Ahead: Riding the Consumption Wave
With India’s macroeconomic environment stabilizing and key growth levers in motion, ITC appears poised to capitalize on the upswing in domestic consumption. Yet, the company remains vigilant—monitoring urban demand elasticity, inflationary patterns, and geopolitical risks, including reciprocal trade tariffs.
In the broader context, ITC’s outlook serves as both a barometer and a beacon for the FMCG sector, highlighting the resilience of India’s consumption story and the importance of strategic agility in navigating a fast-evolving market landscape.
