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Introduction & Market Context
ITC Ltd (NSE:ITC) presented its Q1 FY26 results on August 1, 2025, showcasing strong revenue growth across segments despite a challenging operating environment. The company’s performance comes against a backdrop of India’s GDP expected to grow at 6.5% in FY26, similar to FY25, with rural demand showing resilience and early signs of recovery in urban demand.
The presentation highlighted India’s economic resilience compared to global growth slowdown, with moderating inflation being a key positive. CPI inflation in India has declined significantly from 4.3% in June 2024 to just 0.6% in June 2025, creating a more favorable environment for consumer goods companies.
As shown in the following macroeconomic overview chart, India’s growth remains robust compared to advanced economies:
Quarterly Performance Highlights
ITC reported strong consolidated gross revenue growth of 19.6% year-over-year to ₹23,007 crore in Q1 FY26, while consolidated profit after tax (PAT) increased by 4.9% to ₹5,343 crore. On a standalone basis, gross revenue grew by 19.8% to ₹20,911 crore, with EBITDA increasing by 2.9% (5% excluding the paper segment).
The company’s key financial metrics are summarized in the following slide:
On a consolidated basis, ITC’s performance showed resilience despite challenges in certain segments:
Segment Performance Analysis
ITC’s segment-wise performance revealed varying trends across its diverse business portfolio:
FMCG - Cigarettes
The cigarettes segment delivered a solid performance with net revenue growth of 7.7% year-over-year to ₹8,520 crore, while segment results increased by 3.7% to ₹5,145 crore. The company noted that strategic portfolio and market interventions focused on competitive belts and countering illicit trade helped drive volume-led growth and reinforce market standing.
However, the consumption of high-cost leaf inventory weighed on margins, which was partly mitigated through product mix enrichment and cost management interventions. The company also reported moderation in leaf tobacco procurement prices in the current crop cycle.
FMCG - Others
The FMCG-Others segment witnessed a pickup in growth momentum, with revenue increasing by 5.2% year-over-year to ₹5,777 crore. Excluding notebooks, which continue to face deflationary conditions due to low-priced paper imports, the segment grew by 8.6%. Growth was primarily driven by staples, biscuits, dairy, premium personal wash, homecare, and agarbatti categories.
The segment’s EBITDA margins improved sequentially by 50 basis points to 9.4% in Q1 FY26 compared to 8.9% in Q4 FY25, though they remained below the 11.3% recorded in Q1 FY25. This improvement came despite elevated prices of major commodities including edible oil, wheat, maida, cocoa, and soap noodles.
The following chart illustrates the segment’s revenue growth trajectory:
The sequential improvement in EBITDA margins is shown below:
Agri Business
The Agri Business segment emerged as a standout performer with revenue surging 38.9% year-over-year to ₹9,685 crore, while segment results increased by 21.9% to ₹434 crore. This strong performance was driven by agile execution of trading opportunities leveraging the company’s multi-channel and digitally powered agri commodity sourcing network, as well as growth in leaf tobacco exports.
Paperboards, Paper & Packaging (NYSE:PKG)
The Paperboards, Paper & Packaging segment faced significant challenges despite revenue growth of 7.0% year-over-year to ₹2,116 crore. Segment results declined sharply by 37.8% to ₹163 crore, impacted by sustained influx of low-priced supplies into global markets including India, subdued realizations, and elevated wood prices.
The detailed segment-wise revenue and results breakdown is presented below:
Strategic Initiatives
ITC continues to focus on its "ITC Next (LON:NXT)" strategy, centered around building a future-ready portfolio through innovation, digital transformation, and sustainability. The company is strengthening its core brands while expanding into adjacencies and new growth vectors.
The company’s digital-first and organic portfolio, which includes brands like Yogabar, Mother Sparsh, and 24 Mantra Organic, is now clocking an annual recurring revenue of approximately ₹1,000 crore, highlighting the success of ITC’s diversification strategy.
ITC is also expanding into the FoodTech business as a new growth vector, leveraging its institutional strengths in food science, manufacturing, FMCG food brands, and culinary expertise. The FoodTech business achieved a gross merchandise value of over ₹100 crore in FY25 with approximately 60 kitchens operational.
Sustainability Focus
ITC continues to position itself as a global exemplar in sustainability with ambitious targets for 2030. The company aims to achieve 50% renewable energy usage, 50% reduction in specific GHG emissions, 100% recyclable plastic packaging, and 100% plastic neutrality.
The following slide illustrates ITC’s sustainability targets for 2030:
The company has maintained its water positive status for 23 years, carbon positive status for 20 years, and solid waste recycling positive status for 18 years. Currently, about 52% of ITC’s energy comes from renewable sources, and the company managed approximately 76,000 MT of plastic waste in FY25, maintaining its plastic neutrality commitment.
ITC’s sustainability initiatives extend to social performance as well, with programs impacting millions of farmers, acres of land, and community members across various development areas including climate-smart agriculture, natural resource management, education, and women empowerment.
Full presentation:
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