Diversified conglomerate ITC Limited appears to have delivered a steady March quarter performance, with strong operating margins emerging as the biggest positive for investors despite softer trends in some segments.Reacting to the initial earnings print, Gaurang Shah, Head Investment Strategist at Geojit Investments, said the numbers are unlikely to unsettle the market as EBITDA margins and topline performance have both come in better than expected.Speaking to ET Now, Shah noted that the standalone operating performance looked healthy across segments and there were no meaningful one-off gains distorting the earnings picture. ITC’s EBITDA margin reportedly came in near 40%, sharply ahead of Street expectations of around 34%, indicating resilient profitability despite concerns over taxation in the cigarette business.However, Shah cautioned that the real test for ITC could emerge in the June quarter of FY27 after the latest government tax hikes on cigarettes begin reflecting more fully in volumes and profitability.“Quarter one is something that we should definitely be watching out for,” Shah said, adding that the impact of the second tax hike on smaller cigarettes would become clearer in the coming months.You Might Also Like:The cigarette business has historically remained a major earnings contributor for ITC, but the company has steadily diversified its revenue mix over the years through expansion in FMCG, agri and other non-tobacco businesses. According to Shah, that strategy is now helping cushion the company from regulatory pressures on tobacco.The FMCG segment continued to show healthy traction in the latest quarter and is expected to remain one of ITC’s key long-term growth drivers. However, the agri and paperboards businesses remained relatively subdued, with revenues largely flat.Agri biz could regain momentum over timeShah believes the agri business could regain momentum over time, especially as rural demand conditions improve. He pointed out that agricultural performance remains closely linked to rainfall patterns and rural economic activity.“With the kind of forecast that IMD and Skymet have given, rainfall trends will be important for rural demand and agri-linked businesses,” he said.You Might Also Like:Investors are now expected to closely monitor volume growth in cigarettes, rural consumption trends and margin sustainability over the next few quarters. Market participants will also watch whether ITC can continue scaling up its non-cigarette businesses strongly enough to offset any pressure from higher tobacco taxation.For now, though, the March quarter numbers appear to have reassured the Street that ITC’s diversified business model continues to provide stability even amid regulatory headwinds.You Might Also Like: