ITC Shares Under Pressure After Excise Duty Hike Triggers Broker Downgrades

Shares of ITC Limited are in sharp focus on Monday, January 5, after the stock ended the previous trading session at its lowest level in nearly three years. The decline follows the government’s announcement of an additional excise duty on tobacco products, effective February 1, 2026, triggering broad concerns over earnings visibility in ITC’s core cigarette business.

The stock has witnessed sustained selling pressure, declining nearly 24% over just two trading sessions. On Friday, ITC shares slipped 5% intraday to hit a 52-week low of ₹345.25 before recovering marginally to close at ₹350.10, still down 4% for the day. Over the past five trading sessions, the stock has fallen more than 13%, while losses over the last six months exceed 15%.

The excise duty hike has prompted several brokerages to reassess their outlook on the stock, citing margin compression risks and potential volume slowdown in the cigarettes segment, which remains ITC’s largest revenue contributor despite diversification into FMCG, hotels, and agribusiness.

The sharp correction has also resulted in significant notional losses for state-run insurance companies with large holdings in ITC. Life Insurance Corporation of India, which holds a 15.86% stake, saw the value of its investment decline by ₹11,468 crore within two days. General Insurance Corporation of India and New India Assurance Company together recorded additional losses exceeding ₹2,200 crore.

While ITC’s diversified portfolio provides some cushion, analysts believe near-term sentiment around the stock may remain cautious as markets digest the long-term impact of higher tobacco taxation.

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