Shares of ITC, the country's largest cigarette maker, rose as much as 4.11% to hit an intraday high of ₹292.55 on the National Stock Exchange (NSE) on Monday, August 3. On the BSE, ITC shares advanced as much as 4% amid spike in trading activity.

ITC shares came under buying interest despite reporting a decline in quarterly profit in April-June period after global investment firms came out with positive reports on its first quarter earnings.

Nomura in a note said that worst seems to be behind for the company and cigarette volume decline of 5% was better than estimated volume decline of 10%.

Jefferies said that Q1 earnings missed its estimate, but they were positively surprised by volume resilience.

Jefferies added that earnings miss was largely driven by gradual price hikes and series of interventions, to avoid knee-jerk reaction post 50% tax hike. Encouragingly, volume trend should give management greater confidence to take further price hikes ahead and expect volumes to stay resilient.

CLSA noted that the quarter was marked by a significant increase in cigarette taxes with replacement of compensation cess by GST and excise duties.

Price hikes remained staggered with the introduction of new variants to minimise loss to illicit trade. FMCG other than cigarettes grew 12% year-on-year (YoY) which was in line with its estimates.

ITC Q1 earnings

ITC on Friday reported a decline of 27% in its standalone net profit to ₹3,579 crore in Q1 compared with ₹4,911 crore in the same period last year.

The company's revenue from operations, however, increased 28% year-on-year (YoY) to ₹26,943 crore during the quarter under review in contrast to ₹21,070 crore in the year-ago period.

ITC’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) dropped 28% to ₹4,514 crore in Q1 FY27 as against ₹6,261 crore in the corresponding quarter of the previous fiscal year.

For Q1 FY27, the EBITDA margin contracted to 16.75% as against 29.71% YoY.

“Q1 FY27 was marked by heightened uncertainty in the operating environment due to the ongoing conflict in West Asia, that triggered a sharp increase and volatility in the price of crude oil and crude-linked products along with significant trade and supply chain disruptions,” ITC said in a statement.

As of 10:16 am, ITC shares traded 3.8% higher at ₹291, outperforming the NIFTY50 index which was up 0.8%. The stock was also top gainer in the NIFTY50 index.