Shares of ITC Limited experienced a decline on the National Stock Exchange (NSE) on Friday morning, falling 1.15 percent to ₹304.50 by 11:45 am, following a previous close of ₹308.05. Over the past year, the stock has decreased by more than 28 percent, significantly underperforming the Nifty 50 index, which saw a decline of 3.3 percent during the same timeframe. Trading activity was robust, with 1.39 crore shares changing hands, showing a slight buy-side advantage of 53 percent.
This selling pressure follows the company’s fourth-quarter fiscal 2026 results, released on Thursday, which analysts deemed non-comparable due to a mid-quarter restructuring of cigarette taxation that took effect on February 1. The Goods and Services Tax (GST) on cigarettes was increased from 28 percent of transaction value to 40 percent of retail sale price, accompanied by significant excise duty hikes, leading to an unprecedented tax-related disruption in both primary and secondary sales.
Market reactions to the results have varied. CLSA maintained its “outperform” rating with a target price of ₹394, highlighting that cigarette EBIT exceeded consensus estimates by 15 percent. Jefferies, however, opted for a “Hold” rating at ₹350, warning that the true impact of price increases and volume reductions will become apparent in the first quarter of fiscal 2027. Morgan Stanley kept an “equal-weight” rating with a target of ₹346, anticipating that the stock will remain range-bound until the volume trajectory becomes clearer. Goldman Sachs maintained a “Neutral” rating with a target of ₹330, predicting declines in cigarette volume and EBIT of approximately 8 percent and 17 percent, respectively, in fiscal 2027. Similarly, Motilal Oswal retained a “Neutral” stance with a target of ₹335. On a bearish note, Citi issued a “Sell” rating with a target of ₹290, highlighting structural risks related to price elasticity and potential consumer shifts to illicit products.
On a positive note, ITC’s Fast-Moving Consumer Goods (FMCG) segment reported a 15 percent increase in revenue, with EBIT margins expanding by 200 basis points to 8.3 percent, surpassing estimates. The paperboard business also exhibited signs of early recovery, supported by minimum import price protection. However, the agriculture segment fell short of expectations, declining by 15 percent due to geopolitical disruptions from the West Asia conflict.
With many cigarette price hikes still pending and limited visibility for fiscal 2027 earnings, analysts anticipate continued near-term stock pressure, at least through the first quarter.
