Shares of diversified FMCG major ITC Ltd gained around 4 per cent in intra-day trading on the BSE on Monday, reaching ₹292.45, as investors expressed optimism that the company may be moving past its recent earnings challenges. Market sentiment improved after the company’s first-quarter results, with brokerages indicating that the risk-reward profile could become more favourable going forward.
ITC’s cigarette business witnessed pressure during the April-June 2026 quarter, with earnings before interest and tax (EBIT) declining year-on-year. However, analysts noted that profitability, which was significantly impacted in April, showed gradual improvement during the quarter following staggered price increases.
Brokerages expect ITC to continue implementing calibrated price hikes across its wide range of brands to improve profitability while limiting the impact on sales volumes. Analysts at Nomura said that gradual price adjustments could support better unit economics in the coming quarters.
According to estimates, ITC is expected to recover its cigarette EBIT margins to pre-tax hike levels by the fourth quarter of FY27, earlier than previous expectations. Analysts have projected a decline in volumes and EBIT during FY27, followed by a recovery in FY28 with improved growth prospects.
The recent rise in ITC’s share price reflects investor confidence that the company’s earnings pressure may be easing and that improved margins, pricing strategies and operational recovery could support future performance. Market participants will continue to track demand trends and the pace of earnings recovery in the coming quarters.
