ITC Shares Fall as Middle East Tensions Rattle Markets; Stock Near 52-Week Low

Shares of ITC Ltd continued to slide in Wednesday's ’s trading, with the stock last quoted at ₹312.75 on the NSE, down 0.68% from the previous close of ₹314.90. The stock has endured a sharp correction of over 24% in the past six months, reflecting sustained selling pressure amid broader market weakness and regulatory impacts. ITC shares are also down 27.61% from their 52-week high and are trading near the 52-week low of ₹302 hit on February 2, 2026.

The broader Indian market has been under pressure this week, influenced by heightened geopolitical tensions in the Middle East. Escalating conflict involving the United States, Israel and Iran has triggered a global sell-off in equities, pushing crude oil prices sharply higher and raising fears of supply disruptions and economic uncertainty. Indian benchmark indices such as the Sensex and Nifty 50 plunged sharply, with markets opening deep in the red as risk sentiment soured globally following the latest military actions. This has contributed to overall weakness across stocks, including defensive names like ITC.

ITC’s share performance has also been weighed down by domestic factors. The tobacco-to-FMCG conglomerate has struggled over the past few years, with shares down 18% in two years and 12% in three years. A significant blow this year came from the government’s decision in February 2026 to increase indirect taxes on cigarettes by replacing the compensation cess with higher excise duties, which has shaved off an additional 12% from the stock this year. Brokers estimate that, to remain neutral on earnings per cigarette, ITC would need to raise cigarette prices by about 33% — a challenging proposition given potential volume pressure. This regulatory change has been a key factor behind the stock’s decline.

Global brokerage CLSA has retained an ‘Outperform’ rating on ITC but trimmed its price target by 24% to ₹367 from ₹485 earlier, citing the higher tax burden on cigarettes. According to CLSA, indirect tax increases have materially impacted margins and earnings assumptions. CLSA’s revised target reflects near-term earnings pressure despite a positive long-term view. Meanwhile, Kotak Institutional Equities carries a ‘Reduce’ rating with a target of ₹338, signaling caution given uncertainty around demand and volume in the tobacco business.

Despite these challenges, there are bullish views on ITC over the long term. For the financial year 2025, ITC announced a 650% dividend payout, translating to ₹6.5 per share, which has already been credited — a strong dividend yield that supports investor confidence at current valuations (P/E near 19x and a dividend yield around 4.4%). Many market participants see this as an attractive yield amid volatility. Vinit Bolinjkar, Head of Research at Ventura, highlighted the company’s resilience following the duty hikes, noting that price increases of about 20%–40% across key brands are expected to absorb much of the tax impact and protect margins. Bolinjkar also pointed to potential growth drivers such as urban consumption recovery, a revival in hotel segment occupancy above 70%, and expansion into non-cigarette FMCG with a revenue target of ₹1 lakh crore by 2030, recommending a Buy with a target of ₹415.

However, not all analysts are uniformly optimistic. Nandish Shah, AVP-PCG Research and Advisory (Fundamental) at Motilal Oswal Financial Services, maintains a Neutral view with a target price of ₹365, warning that sustained volume declines following price hikes and regulatory drags could temper near-term growth.

In summary, while ITC’s fundamentals — including strong dividend payouts and diversified business segments — provide support, ongoing geopolitical risks and regulatory challenges continue to exert selling pressure on the stock. The current market environment, shaped by global risk-off sentiment and rising crude oil prices, has amplified volatility, leaving ITC and many other large-caps in a weak trading position. Investors remain divided on the stock’s near-term outlook, though long-term prospects are viewed positively by several market analysts.