ITC shares fall 5% to fresh 52-week low on multiple rating downgrades: Check latest target prices

ITC shares fall 14% in two days, here's why GQG's Rajiv Jain called the firm a 'great growth story' two years ago

• ITC shares fall 5% after new cigarette excise duty was announced.
• Parliament approved sharp excise duty hike, effective February 1
• Brokerages downgraded ITC, citing tax hike impact on earnings and stock price

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The shares of ITC dropped more than 5 percent on January 2, extending significant losses for the second consecutive session after the government imposed new excise duty on cigarettes, effective from next month.

The shares of the hotels-to-cigarettes conglomerate hit a fresh 52-week low of Rs 345.25 apiece in the early trading hours of Friday, breaking the previous record just set yesterday.

Why are ITC shares falling?

The Parliament in December approved the Central Excise (Amendment) Bill, 2025, clearing the way for a sharp increase in duties on cigarettes and other tobacco products. It replaces a temporary levy on cigarettes and tobacco products.

The excise duty would be imposed on cigarettes in addition to a 40 percent GST, according to an order issued late on Wednesday. The finance ministry notified that an excise duty of Rs 2,050–8,500 per 1,000 sticks, depending on cigarette length, will take effect from February 1.

Total taxes on cigarettes in India currently account for about 53 percent of the retail prices, well below the World Health Organization (WHO) benchmark of 75 percent which is aimed at discouraging consumption. This includes a 28 percent goods and services tax and additional value-based levy based on the size of the cigarettes.

The duty translates into a 22-28 percent increase in overall costs for 75-85 mm cigarettes, analysts at ICICI Securities said. "Cigarettes longer than 75 mm account for roughly 16% of ITC's volumes and are likely to see price increases of 2–3 rupees per stick as a result of the levy," they said.

JPMorgan on ITC:

JPMorgan downgraded its rating on ITC shares to ‘Neutral’ and reduces its target price to Rs 375 per share from Rs 475 per share. The latest target price implies a downside potential of more than 3 percent over the previous closing price of Rs 363.85 apiece.

The international brokerage cited the sharp tax increase for cigarettes as the reason for the downgrade, although it awaits clarity on finer aspects of the tax changes. Early read suggests that ITC will have to announce a weighted average price hike of more than 25 percent (if NCCD is removed), and 35 percent (if NCCD is kept the same) to ensure than net realization remains unchanged.

The higher tax increase for the King Size Filter (KSFT) segment implies increased risk of consumers downtrading to cheaper variants, JPMorgan further said, adding that it may also induce an increase in offtake of illicit cigarettes.

JPMorgan expect ITC to largely pass on the tax impact to the consumers, which could would impact volume/earnings growth and weigh on stock multiples. This could restrict stock upside from current levels over the next 6-9 months, it added.

Also read: Rajiv Jain's GQG, PPFAS are among leading institutions to have over 1% stake in the firm

Nuvama on ITC:

Nuvama downgraded the stock to ‘Hold’ with a target price of Rs 415 per share. This implies an upside potential of more than 14 percent from the stock’s previous closing price.

The international brokerage said that while it expected a sharp tax hike on cigarettes, the maginitude is much higher than expectations.

It added that this could prompt consensus downgrades to ITC’s cigarette volumes and EBITDA estimates. It reckons a more than 20 percent price hike and a more than 30 percent tax hike overall, for which it cut EBITDA estimates by 7 percent each for FY27 and FY28.

UBS on ITC:

UBS maintained its ‘Buy’ call on the stock, but reduced its target price t0 Rs 430 per share from Rs 490 per share. This implies an upside potential of nearly 35 percent from the stock’s previous closing price.

The international brokerage said that the additional excise duty will likely weigh on the stock price and create uncertainty. It added that clearly the prospect of earnings growth revival have weakened.

Current price is now baking in cigarette EBIT growth of 2-3 percent sustainably, it added.

Jefferies on ITC:

Jefferies downgraded the stock to ‘Hold’, and cut its target price to Rs 400 per share, implying an upside potential of nearly 10 percent from the stock’s previous closing price. The global brokerage said that ITC may need about 40 percent price hikes to pass on the impact of tax hike, which will impact volumes.

Motilal Oswal on ITC:

Motilal Oswal Financial Services downgraded the stock to ‘Neutral’, with a target price of Rs 400 per shares, same as Jefferies. The domestic brokerage said that such a sharp tax increase is unprecedented and has surprised the brokerage firm given the backdrop of stable taxes over the last few years.

ITC share price:

ITC shares have fallen more than 13 percent in the past five days, and over 15 percent in the past six months.

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