ITC Shares Continue to Fall as Stock Drops 16% in a Month, Extending Investor Losses; Experts Predict 48% Upside In Long-Term

Shares of FMCG major ITC extended their losing streak on the ninth day of the New Year 2026, starting trade on a weak note amid broader market volatility. The stock has corrected nearly 16% over the past one month, raising concerns among investors. ITC was trading at ₹338.50, lower than its previous close of ₹340.20, and hovering close to its 52-week low of ₹337, compared with a 52-week high of ₹472.

The sharp decline in ITC’s share price in early January has been triggered by the government’s decision to impose an excise duty hike on cigarettes, a key profit driver for the company. The finance ministry has notified that an excise duty of ₹2,050–8,500 per 1,000 cigarette sticks, depending on length, will come into effect from February 1, 2026, in addition to the existing 40% GST. The announcement led to heavy selling pressure, with brokerages flagging near-term risks to volumes and earnings.

Despite the negative sentiment, several market experts remain optimistic, stating that much of the downside risk is already priced in. Sharekhan has maintained a Buy rating on ITC with a target price of ₹505, implying an upside potential of nearly 48% from current levels. The brokerage noted that ITC continues to generate strong cash flows from its cigarette business, while its FMCG segment is expected to benefit from stable GST rates and personal tax relief measures.

ITC is also viewed as an attractive stock for income-focused investors due to its consistently high dividend payout, offering a yield of around 4.17% at current prices. However, analysts cautioned that the full impact of the excise duty hike will be felt in FY27, raising questions over the sustainability of dividend levels. Jefferies termed the duty hike a “meaningful negative surprise” for the sector, while ICICI Securities highlighted that the revised duty translates into a 22–28% cost increase for 75–85 mm cigarettes. Cigarettes longer than 75 mm—accounting for around 16% of ITC’s volumes—could see price hikes of ₹2–3 per stick.