ITC's share price fell to a fresh 52‑week low on Tuesday, driven by the Indian government's plan to raise excise duty on cigarettes.
New cigarette tax details
Starting February 1, 2026, the government will add an excise duty of ₹2,050 to ₹8,500 per 1,000 cigarettes, depending on their length. This sits on top of the existing 40% GST.
A separate health cess will also start on pan‑masala manufacturers, but the overall tax on pan‑masala stays at 88%.
How brokers reacted
- Nuvama cut its rating to “hold” and lowered the price target to ₹415‑₹534, saying the tax rise is larger than expected.
- Motilal Oswal moved from “buy” to “neutral”, setting a target of ₹400, warning that higher taxes could push some sales to illegal brands.
- Axis Securities also changed to “hold” with a target of ₹380, noting near‑term pressure on margins.
Recent price performance
ITC shares have fallen about 17% in the nine trading days of January, roughly 20% over the past six months, and 24% in the last year. The stock hit a 52‑week high of ₹471.50 on February 1, 2025.
What this means for investors
The higher tax could cut the company's cigarette earnings, which currently make up a large part of its profit. If volumes shift to cheaper or illegal products, the impact could be bigger. Retail investors should watch how the company adjusts its pricing and whether it can offset the loss with growth in its other businesses.
Remember, this is just an overview, not a prediction. Do your own research or talk to a qualified advisor before making any investment decisions.