ITC Share Price Tanks 3.88% to Rs. 349.75 After Fresh 52-Week Low

Overview:

• ITC share price dropped as much as 5% to Rs. 345.25 after a new excise duty was announced.

• Multiple brokerages downgraded ITC, lowering target prices from Rs. 375–Rs. 430.

• LIC lost nearly Rs. 11,000 crore in two days due to the ITC share decline.

ITC share price fell more than 5% on January 2. The stock extended losses for the second consecutive session after the government announced a sharp excise duty hike on cigarettes, effective February 1, 2026. The stock hit a fresh 52-week low of Rs. 345.25, breaking the previous record. ITC share price currently trades at Rs. 349.75, marking a 3.88% decline intraday. Here’s an in-depth ITC share price analysis based on Moneycontrol data.  

Trading Activity and Volatility

The stock opened at Rs. 360, with a day’s low of Rs. 345.25 and a high of Rs. 360. Trading volumes surged to over 93 million shares, significantly above the 20-day average of 21.89 million. The company’s market capitalization now stands at Rs. 4.38 lakh crore, reflecting substantial investor caution.

ITC share price chart on Moneycontrol shows a loss of 3.86% in intraday: 

Government Excise Duty Hike

The decline follows the Central Excise (Amendment) Bill, 2025, which imposes duties ranging from Rs. 2,050 to Rs. 8,500 per 1,000 cigarettes, depending on size. This is in addition to the GST, which has increased to 40% from 28%. Analysts estimate that the overall cost for popular 75–85 mm cigarettes could rise 22–28%, putting pressure on volumes and margins.

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Brokerage Downgrades and Target Prices

Multiple brokerages reacted quickly to the tax announcement. JPMorgan cut ITC shares to ‘Neutral,’ lowering the target price to Rs. 375. Motilal Oswal and Jefferies revised ratings to ‘Neutral’ and ‘Hold’ with targets of Rs. 400. Nuvama Securities downgraded the stock to ‘Hold,’ citing potential EBITDA impacts for FY27 and FY28. UBS and ICICI Securities maintained more positive views, citing ITC's share pricing power.

Impact on Institutional Investors

Institutional investors are feeling the impact. LIC, with a 15.86% stake in ITC, saw the notional value of its investment drop by nearly Rs. 11,000 crore in two days. Other major shareholders, including SBI Mutual Fund, ICICI Prudential MF, and GQG Partners, are monitoring the situation amid uncertainty about cigarette volumes and earnings.

Sector-Wide Fallout

The broader tobacco sector has also been affected. Godfrey Phillips India shares dropped over 20% in two sessions, showing how the excise duty hike has shaken investor confidence across the industry. Analysts warn that aggressive price increases could slow volumes and encourage illicit cigarette sales.

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ITC Stock Outlook

While ITC share price faces near-term pressure from the excise duty hike, its long-term prospects remain solid due to its diversified businesses in FMCG, hotels, and agribusiness. Investors should anticipate volatility in the coming months as earnings and volumes adjust to the new tax regime.

FAQs:

1. Why did ITC shares fall sharply?
The steep drop in ITC's share price results from an increase in the government's excise duty on cigarettes, which the company must pay starting February 1. The increase will force ITC to raise costs, thereby putting pressure on total volume and margins, and causing brokers to downgrade their ratings across the board.

2. What is ITC’s current share price and 52-week low?
Currently, ITC shares are trading at Rs. 349.75, following a further decline to 52-week lows of Rs. 345.25 after continued losses due to the excise duty increase.

3. How have brokerages reacted to ITC’s new tax situation?
Brokers such as JPMorgan Chase, Motilal Oswal, Jefferies and Nuvama have all lowered their ratings on ITC due to fears of deteriorating earnings and a reduction in EBITDA to between Rs. 375 and Rs. 430. 

4. How did the excise duty hike affect institutional investors?
Institutional investors, including LIC, saw their notional investment in ITC drop by almost Rs. 11,000 crore over two days following the excise duty increase. Other institutional funds are currently monitoring the impact on ITC's volume and earnings.

5. What is the long-term outlook for ITC amid this tax change?
Higher excise taxes on cigarettes will immediately negatively affect ITC's financial performance. However, the diversification of ITC's businesses into FMCG, Hotels and Agri business will allow for continued long-term growth of the company, despite the short-term volatility from the excise increase.