ITC jumped 3% on Friday after the company’s second-quarter revenue, which rose 16% year-on-year, beat analysts’ estimates.

What Happened: The fast-moving consumer goods company reported a standalone net profit of ₹5,078 crore, a 3.1% increase year on year. The company's revenue came in at ₹19,327.72 crore. While the company's revenue beat analysts' expectations of ₹17,754 crore, profit came in line with estimates of ₹5,078 crore.

Citi said the company showed a mixed performance in the second quarter with the revenue ahead of its estimates largely led by the agri business. On the other hand, profit numbers took a beating across multiple segments. Cigarette revenue increased by 7% year-over-year, net of excise, which aligned with Citi’s expectations. The brokerage has “buy” call for the stock with a target price of ₹560.

The company reported strong sales performance in the second quarter. However, margins faced pressure across segments, Nomura said.

Cigarette volume grew 3% year on year, surpassing its estimate of 2.5%, but margins contracted by 145 basis points. Fast-moving consumer goods (FMCG) growth of 5.4% was in line with its expectations, though margins decreased by 37 basis points.

The hotels segment remained robust, paper sales showed improvement, and the agriculture segment delivered a pleasant surprise, it noted. Nomura maintained a “buy” rating on ITC with a target price of ₹555.

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Morgan Stanley has an “overweight” call on ITC with a target price of ₹554. The key positives for the company included strong net cigarette revenues, robust momentum in the hotel business, and a rebound in the agriculture sector, it noted. Challenges emerged from weak home consumption, rising inflation in food inputs and tobacco leaf, as well as overall weakness in the paper segment.

Kotak Institutional Equities had an “add” recommendation for the stock and upgraded its target price to ₹540. The company’s EBITDA growth at 4.9% to ₹6,335.2 crore beat Kotak’s estimates. Volume growth in the cigarette business matched expectations, it said.

The brokerage added that paperboard and packaging segments continued to be affected by low-priced supplies from China. There is notable competition in the FMCG sector, coupled with ongoing weakness in paperboard products, it said. The brokerage sees ITC’s earnings growing by 9.6% in FY26 and 9% in FY27.

The Q2 results were below HDFC Securities’ estimates, which said the numbers were weak in all categories except hotel and agribusiness. The core businesses of cigarettes and FMCG remained underperforming, while the hotels and agribusiness sectors delivered positive surprises, it said. The brokerage maintained its “reduce” call for ITC with a target price of ₹420.

Price Action: Shares of ITC were up 3.11% to ₹486.35 on Friday morning.

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