ITC shares traded with modest gains on Tuesday, closing 0.32% higher at ₹315.70, as the stock underperformed the broader market rally triggered by optimism surrounding the India–US trade deal. While benchmark indices surged and investor sentiment remained upbeat, ITC failed to attract strong buying interest. Shares of ITC have fallen sharply in recent months, from Rs 400 levels due to higher tax levy on cigarettes that came into effect from February 1.
Against this challenging backdrop, ITC reported a decline in profitability for the third quarter. The diversified consumer goods major posted a 10% year-on-year fall in standalone net profit, which slipped to Rs 5,089 crore for the quarter ended December 31, compared with Rs 5,638 crore in the same period last year. The drop was driven by rising input costs and a one-time expense linked to India’s new labour codes.ITC incurred a one-off charge of Rs 274 crore related to the implementation of the new labour laws. The reforms, which mark the biggest overhaul of labour regulations in decades, have impacted corporate earnings across sectors.
The company’s total expenses rose 5% to Rs 13,472 crore, partly due to higher prices of key raw materials, including edible oil, wheat and leaf tobacco. Tobacco prices have climbed in recent quarters amid improving export demand, squeezing margins even as cigarette volumes remained stable. Despite the pressure, ITC’s cigarettes business recorded an 8% revenue growth in the quarter, while its FMCG segment—home to brands like Aashirvaad, Sunfeast and Yippee—grew 11%. Overall revenue increased 6% to Rs 19,359 crore. ITC shares had earlier fallen nearly 17% during a nine-session losing streak between January 1 and January 13. Reflecting the weak outlook, Prabhudas Lilladher lowered its target price on ITC to Rs 314 from Rs 348, while retaining its ‘Reduce’ rating.
The revised target suggests a downside of over 1% from the previous closing price of Rs 318.60. The brokerage remains cautious on the cigarette segment, citing expectations of 22–50% price hikes due to higher excise rates, which could hurt volumes and profitability in the near term. From a technical perspective, the Rs 325–Rs 320 zone remains a key support level, where the stock is currently attempting to stabilise. A sustained breach below this range could open the door for further downside. On the upside, the earlier breakdown zone of Rs 360–Rs 365 is likely to act as strong resistance.