Shares of FMCG major ITC Ltd were trading marginally higher on Wednesday, with the stock quoted at ₹335.75 on the NSE, up ₹1.05 or 0.31%, after witnessing sharp losses in the previous session. Yesterday (Tuesday, January 13), ITC shares fell nearly 1% to ₹334.85, touching a fresh 52-week low, as investor sentiment weakened amid broader market pressure and concerns over the upcoming excise duty hike on cigarettes, effective February 1, 2026.
The stock has been under sustained pressure since the government announced a steep increase in cigarette taxes earlier this year. In December 2025, the finance ministry amended the Central Excise Act, introducing an additional excise duty ranging from ₹2,050 to ₹8,500 per 1,000 cigarette sticks, depending on length, over and above the existing 40% GST. Following the announcement, several brokerages downgraded the stock, citing concerns over volume growth and profitability in ITC’s core cigarette business.
Nuvama downgraded ITC to “hold” from “buy” and revised its price target to the ₹415–₹534 range. The brokerage noted that while a tax hike was anticipated, the magnitude was higher than expected, likely leading to consensus downgrades to cigarette volume growth, EBITDA estimates, and valuation multiples. Similarly, Motilal Oswal downgraded the stock from “buy” to “neutral” and cut its target price to ₹400. The brokerage highlighted that a stable tax regime over the past five years had helped curb the illicit cigarette market, enabling ITC’s cigarette volumes to grow at a 5% CAGR. However, the sharp tax hike could reverse this trend by pushing consumers toward illicit brands or encouraging downtrading within legal categories.
Motilal Oswal estimates that ITC may need to implement a portfolio-level price hike of at least 25% merely to maintain current net realisation per cigarette stick. The brokerage added that earnings pressure in the cigarette segment could remove near-term catalysts such as soft tobacco prices and recovery in FMCG and paper businesses, while also weighing on valuation comfort. Despite today’s marginal uptick, ITC shares have had a weak start to 2026. The stock has declined 17% in just nine trading sessions in January, fallen nearly 20% over the past six months, and is down about 24% over the last year. ITC had touched a 52-week high of ₹471.50 on February 1, 2025.ITC shares are listed on both the BSE and NSE.