ITC Share Price Drops 8% to 52-Week Low After Excise Duty Hike: Key Reasons Explained

ITC Limited, India’s leading diversified conglomerate, saw its share price slide sharply on 1 January 2026, falling around 4-8% intraday and touching a fresh 52-week low in the ₹385-₹378 range. The decline followed a government hike in excise duty on tobacco products and a large block deal worth about ₹1,600 crore, which unsettled investors and triggered heavy selling pressure. The move marked ITC’s sharpest single-day fall in several months, extending its broader weakness in 2025 and reflecting renewed pressure across tobacco stocks.

This article explains why ITC shares fell, what the decline means for investors, and how analysts are evaluating the company’s near-term outlook amid regulatory uncertainty.

Table of Contents

1. What happened to ITC share price today
2. Key reasons behind the ITC stock decline
3. How Excise Duty Hikes Affect ITC’s Business
4. ITC Business Overview and Financial Snapshot
5. Technical Levels and Valuation Check
6. Analyst Outlook and Target Prices for ITC
7. What Should Investors Do Now?
8. FAQs on ITC share price fall

What Happened to ITC Share Price Today?

ITC shares declined sharply during early trade, slipping from a previous close of around ₹403 to an intraday low between ₹385 and ₹378, depending on the exchange and timing.

Key price movement highlights:

• Opening price on NSE: around ₹402

• Intraday low: ₹385-₹378

• Mid-session trading range: ₹386-₹388

• Steepest single-day decline in over eight months

The fall pushed ITC to its lowest level in about one year and marked its first negative annual performance since 2020, with the stock down roughly 12% in 2025 so far.

For a clearer view of recent price action, support levels, and valuation metrics following the excise duty announcement, check the ITC share price and detailed stock indicators.

Key Reasons Behind the ITC Stock Decline

1. Excise Duty Hike on Tobacco Products

The primary trigger was a fresh excise duty hike on cigarettes and other tobacco products, notified by the Finance Ministry.

Key details:

• Effective date: 1 February 2026

• Magnitude: around 8-10% increase, as indicated by market estimates

• Structure: Existing duties subsumed under a GST-like framework

• Impact: Higher effective tax burden on cigarette manufacturers

As India’s largest cigarette maker, ITC faces near-term margin concerns, which the market priced in immediately.

2. Large Undisclosed Block Deal

Selling pressure intensified after a large block deal involving approximately 3.76-4 crore shares was executed during market hours.

Block deal snapshot:

The lack of clarity on buyer and seller identities added to uncertainty and triggered panic selling.

3. Weak Sentiment Across Tobacco Stocks

The excise duty announcement triggered a broader sell-off across the sector:

• Peer tobacco stocks fell around 8-10%

• Investor concerns rose over the potential growth of illicit cigarette trade following higher taxes

How Excise Duty Hikes Affect ITC’s Business

Cigarettes contribute roughly 40-45% of ITC’s revenue and an even higher share of operating profits.

Higher excise duty impacts ITC through:

• Margin pressure if price hikes are delayed or only partially passed on

• Volume risk due to higher consumer prices

• Near-term earnings volatility driven by regulatory uncertainty

Historically, ITC has managed tax hikes through calibrated price increases, but repeated increases reduce pricing flexibility over time.

ITC Business Overview and Financial Snapshot

ITC continues to operate as a diversified conglomerate with multiple revenue drivers.

Core segments:

• Cigarettes: High-margin but heavily regulated
   
• FMCG (foods and personal care): 4.8-17% YoY growth in recent quarters
   
• Hotels: Demerged earlier in 2025 to unlock shareholder value
   
• Paperboards and packaging: Stable, cash-generating business

Key financials:

• FY25 revenue: ₹81,613 crore, up 10.45% YoY
   
• FY25 PAT: ₹35,052 crore, up 69% YoY
   
• Dividend: ₹14.35 per share
   
• Market capitalisation: approximately ₹4.8-5.0 lakh crore
   
• P/E ratio: around 25

Technical Levels and Valuation Check

From a price-action perspective:

• Strong support zone: ₹385-₹380

• Immediate resistance: ₹400-₹403

• 50-day and 200-day moving averages indicate short-term weakness

Valuation indicators:

• Price-to-book value: around 7.1x

• Dividend yield remains relatively attractive among large-cap peers

Analyst Outlook and Target Prices for ITC

Brokerages remain cautiously optimistic over the long term despite near-term policy risks following the recent ITC share price fall.

• Target price range: ₹445-₹567

• Average target: around ₹495

Key views:

• Macquarie maintains an outperform rating with a ₹500 target, citing easing leaf tobacco costs and potential 10% plus cigarette EBIT growth once tax clarity emerges

• Other analysts highlight FMCG and non-cigarette businesses as key long-term growth drivers

Further re-rating depends largely on stability in tobacco taxation policy.

What Should Investors Do Now?

For investors evaluating the ITC share price fall, the key decision now hinges on risk tolerance, investment horizon, and expectations around future tobacco taxation.

• Short-term traders should brace for heightened volatility driven by policy developments
   
• Dividend-focused investors may continue to hold, supported by strong cash flows
   
• Long-term investors should closely monitor Q3 FY26 results and any further tax announcements before increasing exposure

ITC remains fundamentally strong, but regulatory risks are likely to dominate near-term sentiment.

Want to understand how ITC managed profit growth despite revenue pressure and regulatory headwinds? Read this detailed ITC Q2 FY26 Results analysis covering segment performance and earnings quality.

FAQs on ITC Share Price Fall

1. Why did ITC shares fall sharply today?
The fall was driven by a fresh excise duty hike on tobacco products effective February 2026 and a large block deal involving about 3.76-4 crore shares.

2. How does the excise duty hike impact ITC profits?
Higher excise duty raises costs for cigarette manufacturers and can compress margins unless the increase is fully passed on to consumers.

3. Has ITC entered a long-term downtrend?
The stock is weak in the short term, but long-term performance depends on tax stability and growth in non-cigarette businesses.

4. What is the key support level for ITC stock?
The immediate support zone lies between ₹385 and ₹380, which aligns with the recent 52-week low area.

5. Are analysts still positive on ITC shares?
Most analysts retain positive long-term views with target prices between ₹445 and ₹567, provided there are no further adverse tax shocks.