ITC Q1 Results: Net Profit Falls 15.6% as Rising Expenses Weigh on Earnings; Revenue Growth Fails to Lift Bottom Line

Diversified conglomerate ITC Limited reported a 15.6% year-on-year decline in consolidated net profit for the first quarter of FY2026-27, as rising operating expenses and volatility in crude oil prices weighed on the company's earnings. Despite the drop in profit, the FMCG-to-hotels major posted strong growth in revenue and operating income, supported by robust performances across several business segments.

ITC Q1 Net Profit Declines 15.6%

According to a regulatory filing released on Friday, ITC's consolidated net profit stood at ₹4,508.79 crore during the April-June quarter of FY2026-27, compared to ₹5,343.41 crore in the corresponding quarter of the previous financial year.

The decline in profitability was primarily attributed to a significant increase in total expenses during the quarter.

Revenue From Product Sales Registers Strong Growth

Despite pressure on earnings, ITC delivered healthy top-line growth.

The company's revenue from product sales increased 27.82% year-on-year to ₹29,409.82 crore, reflecting strong demand across its diversified business portfolio.

Meanwhile, operating income rose 27.64% to ₹29,523.30 crore, compared with ₹23,129.35 crore in the same quarter last year.

Expenses Jump 48%, Impacting Profitability

One of the biggest reasons behind the decline in quarterly profit was the sharp increase in operating costs.

ITC reported that its total expenses surged 48% year-on-year to ₹24,809.95 crore, significantly outpacing revenue growth and putting pressure on margins.

Despite higher costs, the company's total consolidated income increased 26.74% to ₹30,179.01 crore, highlighting continued business expansion across key segments.

Crude Oil Price Volatility Added Pressure

The company noted that the April-June quarter witnessed sharp fluctuations and elevated prices of crude oil and related products, affecting global trade and supply chains.

Higher input costs and supply chain disruptions contributed to increased operating expenses during the quarter.

ITC Group Businesses Deliver Strong Performance

Despite the decline in net profit, ITC highlighted strong contributions from several group companies.

The company stated that its diversified businesses performed well during the quarter, led by:

ITC Infotech

Surya Nepal

Sproutlife Foods

ITC Hotels

The strong performance of these businesses helped support overall revenue growth despite challenging market conditions.

Outlook

While rising expenses affected quarterly profitability, ITC continues to benefit from its diversified business model and steady growth across FMCG, hospitality, information technology, and international operations. Investors will closely monitor the company's cost management strategy, commodity prices, and demand trends in the coming quarters.