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Jefferies cuts ITC target to Rs 350 as Q4 profit rises 5% but revenue slips 7%
Our read
Margin expansion to 40% via price hikes is working, but the 7% revenue slip signals volume pressure that pricing alone won't fix heading into a potential Q1 tax shock.
The report,
ITC Q4FY26 profit rose 5% to Rs 5,113 crore on price hikes despite 7% revenue decline. Jefferies cut TP to Rs 350 citing cigarette tax hike impact in Q1FY27; Citi, MS, JPMorgan, Macquarie maintained ratings with cautious near-term outlook.
Reported figures
From the report. Source details below
| Jefferies TP cut to Rs 350 from | Rs 400 |
|---|
Also in the report
- Net Profit Rs 5,113 crore +4.9% YoY
- Revenue Rs 16,050 crore -7% YoY
- EBITDA Rs 6,425 crore +7.3%
Other figures
- EBITDA Margin 40.03%
- Citi TP Rs 290
- JPM TP Rs 325
- Macquarie TP Rs 330
Why it matters to operators
ITC's reliance on cigarette pricing for profit growth amid declining topline strengthens the case for accelerating FMCG and non-tobacco diversification through bolt-on M&A.
The counter-case
The case against this reading — not reported by the source.
Revenue declining 7% YoY is the real story being masked by price-led margin expansion to 40% — volume growth in cigarettes is likely flat-to-negative and FMCG/paperboard segments are bleeding. You can't price-hike your way to growth indefinitely, especially with a GST/cigarette tax hike looming in Q1FY27 that Jefferies explicitly flagged. The 5% PAT growth is the lowest quality of earnings: shrinking topline, expanding margins via mix and pricing, and a regulatory cliff ahead. Hotels demerger optics are done; the standalone cigarette cash cow now faces tax compression with no offsetting volume engine.
The source
First seen