83% From One Business: ITC’s Growth Story

When you think about ITC, the first instinct is still to associate it with cigarettes.

But if you look at growth, that story is starting to shift.

And that divergence is becoming harder to ignore.

On one side, it remains deeply dependent on cigarettes for profitability.

On the other hand, it is steadily building multiple growth engines that are trying to dilute that dependence over time.

The company is not replacing its core. It is layering new businesses on top of it.

This is what makes ITC worth tracking right now.

The renewed focus on the stock has largely come from recent tax changes on cigarettes.

Every time taxation comes into the picture, the market goes back to asking the same question.

How exposed is ITC to its core business? To answer this question, let us look at the numbers for ITC.

In Q3 FY26, ITC reported gross revenue of ₹19,200 crore, EBITDA of ₹6,271 crore, and profit of ₹5,294 crore.

Cigarettes continue to dominate profitability in a way that no other segment comes close to matching.

In the same quarter, the cigarette business generated ₹5,177 crore in profit. FMCG, despite being positioned as the next growth engine, contributed ₹450 crore.

And yet, FMCG is where the narrative is shifting.

The segment grew at over 11% year-on-year, with margins expanding meaningfully.

Parts of the portfolio, especially digital-first and organic categories, are scaling much faster, growing close to 60%.

Categories like staples, biscuits, noodles, dairy, home care, and even agarbattis are seeing traction.

There is a visible attempt to build depth across everyday consumption.

But even with this momentum, FMCG is still in a transition phase.

It is growing and improving profitability, but it has not yet reached a scale where it can materially offset the dominance of cigarettes.

Cigarette volumes have held up, supported by premiumisation and product differentiation.

Revenues grew close to 8% year-on-year, while profit growth stayed above 5%.

At the same time, cost pressures have not entirely disappeared. Leaf tobacco prices remain elevated, even though procurement conditions are gradually easing.

Tax changes continue to add a layer of uncertainty. Yet despite these pressures, the segment continues to deliver consistent cash flows.

That cash flow is what allows ITC to experiment elsewhere.

One of the less discussed but structurally important pieces of the business is the agri segment.

It does more than just add revenue by supporting the rest of the business.

By sourcing raw materials internally and building capabilities in value-added products like spices, coffee, and marine exports, ITC strengthens its integration across both FMCG and cigarettes.

It reduces reliance on external supply chains while quietly expanding its own footprint.

Then there is the paper and packaging business, which sits in a more cyclical space.

Performance has started to improve, with profits rising both sequentially and on a year-on-year basis.

But the broader industry environment is still not entirely supportive.

Low-priced supplies, elevated wood costs, and subdued realisations continue to create pressure.

At the same time, there are early signs of recovery.

Policy measures like minimum import pricing are beginning to help, and improvements in wood availability could ease cost pressures going forward.

The recovery is visible, but it is not yet complete.

The most interesting addition to ITC’s portfolio, however, is still at a very early stage.

The company’s FoodTech business remains small in absolute terms, but the growth trajectory stands out.

With around 70 cloud kitchens operating across five cities and gross merchandise value nearly doubling year-on-year to around ₹150 crore, the segment is beginning to take shape.

Now, if you step back, the structure of the business becomes clearer. Cigarettes continue to drive the bulk of profits.

FMCG is growing faster, but hasn’t closed that gap yet. Agri supports the ecosystem, paper is recovering, and FoodTech remains early.

At the same time, ITC is competing across very different markets.

In cigarettes, it faces Godfrey Phillips and VST.

In FMCG, it competes with Nestlé, Britannia, HUL, and Tata Consumer. In FoodTech, it is up against Swiggy and Zomato.

Each segment operates differently, and margins, competition, and growth cycles are distinct for each of them.

What holds all of this together is how ITC is funding its transition.

The company is not moving away from cigarettes, but it is using that business to build others alongside it.

That makes the shift gradual, not disruptive.

What remains to be seen is whether the newer segments can eventually stand on their own, without relying on the core that built them.