ITC Ltd Q2 net skids 20% to ₹4,137 crore, higher taxation hits cigarette biz profitability

ITC Ltd reported a 20% decline in net profit for the second quarter, reaching ₹4,137 crore. The company’s cigarette business, which contributes the bulk of its earnings, saw profitability squeezed due to higher taxation and excise duties. Despite this, the company's overall revenue from operations surged by nearly 46% to ₹28,317 crore, driven by strong growth in its non-cigarette segments like hotels, agri-business, and paperboards.

This mixed result highlights a key challenge for the tobacco major: the impact of rising government taxes on its core cigarette business. While the growth in other verticals is encouraging, it may not fully offset the margin pressure on its cash cow. For investors, the focus will now be on whether these newer segments can sustain their momentum and eventually compensate for the headwinds in the tobacco sector.

Moving forward, the market will closely watch ITC's ability to maintain this diversified growth trajectory. Any further changes in tax policies or a slowdown in the non-cigarette businesses could impact the company's overall financial performance. Investors should keep an eye on the company's future guidance regarding its expansion plans in these non-cigarette areas.