ITC sells four out of every five cigarettes in India and is nearly 25 per cent-owned by British American Tobacco.
For the quarter ended December 31, Kolkata-based ITC earned Rs 2,635 crore, while analysts were expecting the company to earn Rs 2,692 crore, as per Thomson Reuters data.
Sales came in at Rs 8,800 crore, up 2 per cent from the year-ago quarter, but down 1.4 per cent sequentially.
ITC, which sells brands like Gold Flake, Classic and India Kings, makes most of its revenues from cigarettes.
The impact of high taxes and duties was "exerting unprecedented pressure on legal (tobacco) industry sales volumes," ITC said in a statement.
For the December quarter, the company saw sales of about Rs 4,100 crore from cigarettes, the rest coming from its hotels, consumer goods, agriculture and other businesses.
Prime Minister Narendra Modi's government, which took office last year, has been adopting measures to curb India's tobacco consumption.
It has increased taxes on tobacco products, ordered companies to stamp health warnings across 85 per cent of the surface of cigarette packs and is considering banning the sale of single cigarettes, which make up about 70 per cent of cigarette sales in the country.
Copyright: Thomson Reuters 2015