Shares of ITC Ltd have experienced a significant downturn, plummeting 27% over the last six months. This sharp decline is largely attributed to a hike in tobacco taxes implemented in January 2026, coupled with high volatility across the broader market.
The diversified conglomerate's stock, a prominent player in the fast-moving consumer goods (FMCG) sector, reached a 52-week high of Rs 426.50 on October 31, 2025, before shedding 31% of its value. It hit a 52-week low of Rs 275 on June 4, 2026. However, the stock has shown signs of a mild recovery, gaining 7% from that low to close at Rs 293.40 on Friday, June 21, 2026, with a market capitalization of Rs 3.67 lakh crore.
Performance Overview and Contributing Factors
The year 2026 has been particularly challenging for ITC, with shares already down 20% after a 12% fall in 2025. While short-term indicators (5-day, 10-day, 20-day simple moving averages) show a green trend, longer-term averages (30-day, 50-day, 100-day, 150-day, and 200-day) remain in the red, signaling persistent bearish sentiment.
The primary driver behind the recent slump is the increased taxation on tobacco products, which directly impacts ITC's core cigarette business. Market volatility has further exacerbated investor concerns, affecting overall sentiment around the stock.
Brokerage Perspectives and Future Outlook
Despite the recent struggles, several brokerage firms have weighed in on ITC's prospects, offering mixed views:
- Motilal Oswal has maintained a 'neutral' stance with a target price of Rs 300 per share. The brokerage acknowledges potential benefits from stronger growth in ITC's non-cigarette FMCG business and improved paperboard margins. However, these positives are seen as being offset by significant challenges in the cigarette segment, including rising competition from illicit products, limited scope for price increases, and the delicate balance required to protect volumes while maintaining margins. These factors are expected to pressure ITC's earnings in the near term.
- Systematix has reduced its target price for ITC to Rs 310 from an earlier Rs 340, while maintaining a 'HOLD' rating. The firm has lowered its revenue and earnings estimates for FY27 and FY28 by 2-4%. Systematix now projects revenue and earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 6% and 2%, respectively, over FY26-FY28. The brokerage anticipates a notable decline in cigarette volumes, projecting an 8-10% fall during the first half of FY27. A sharp drop in net realizations during the first quarter could lead to a nearly 5% decline in cigarette volumes and an 11% fall in net sales for the full year. Systematix values ITC at 18 times its estimated FY28 earnings.
The divergence in analyst opinions highlights the uncertainty surrounding ITC's future trajectory. While the company's diversified portfolio offers some resilience, the challenges in its dominant cigarette business, particularly due to tax hikes, remain a critical concern for investors looking ahead.