ITC shares in focus as cigarette costs rise after excise responsibility hike
Cigarette costs have elevated throughout classes after the federal government launched a revised taxation framework. Retail costs have reportedly gone up by Rs 22–25 per pack of 10 sticks, reflecting the upper tax burden. Underneath the brand new regime, excise duties have been set within the vary of Rs 2,050 to Rs 8,500 per 1,000 cigarette sticks, together with a 40% GST fee, efficient February 1, 2026. This has considerably raised the general tax incidence on cigarettes, sparking considerations over demand slowdown, margin stress, and a doable rise in illicit commerce.
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Market contributors consider the latest correction in ITC’s share value is pushed extra by this abrupt coverage shift than by any deterioration within the firm’s underlying enterprise fundamentals. Vincent Ok A of Geojit Investments famous that the decline displays the steep hike in cigarette excise responsibility. He added that ITC is prone to reply with value hikes, because it has completed traditionally, to guard margins, although increased costs might weigh on volumes within the close to time period.Investor considerations centre on the chance of demand destruction in India’s price-sensitive market. Abhishek Jain, Head of Analysis at Arihant Capital Markets, described the scenario as a “double whammy” for ITC, highlighting that the present 28% GST mixed with increased excise duties successfully pushes cigarettes nearer to a 40% tax regime.
In response to Jain, elevated taxation might additionally gasoline the expansion of the illicit tobacco market, which might negatively influence authorized volumes and profitability. Comparable considerations have been raised by the Tobacco Institute of India, which has opposed the tax hike, warning of potential losses for farmers and different stakeholders within the worth chain, together with a rise in unlawful cigarette commerce.
On the earnings entrance, ITC just lately reported its outcomes for the quarter ended December 31, 2025. Standalone internet revenue declined 6.1% year-on-year to Rs 5,088.83 crore, impacted by a one-time price of Rs 273.83 crore associated to the brand new labour code. Income from operations grew 5.8% YoY to Rs 19,359.46 crore, whereas EBITDA rose 7.6% YoY to Rs 6,271 crore. The corporate additionally introduced an interim dividend of Rs 6.5 per share, with February 4, 2026, set because the report date.
Publish outcomes, brokerages remained cautious. Morgan Stanley maintained an Equal Weight score with a goal value of Rs 366, citing better-than-expected working efficiency however no speedy catalyst for a rerating. Motilal Oswal reiterated its Impartial stance with a goal of Rs 365, implying round 15% upside, whereas describing the quarter as a “wholesome efficiency however a non-event after the tax hike.”
ITC shares ended 3.95% decrease at Rs 309.45 on the NSE on Sunday.
From a technical perspective, ITC seems deeply oversold. The 14-day RSI stands at 18.4, with readings under 20 usually thought of strongly oversold, indicating the opportunity of a short-term rebound. Nevertheless, the broader development stays weak, because the inventory is buying and selling under all 8 key easy shifting averages, highlighting persistent bearish momentum.
(Disclaimer: Suggestions, strategies, views and opinions given by the specialists are their very own. These don’t symbolize the views of The Financial Occasions.)
