Excise duty impact: ITC shares slip to lowest levels since Feb 2023; Rs 45K cr m-cap gone
By 12.48 pm, ITC had plunged 10 per cent to hit a low of Rs 362.70 apiece. This would be the lowest level for the stock since 1 February 2023's closing of Rs 361.45.
- Jan 1, 2026,
- Updated Jan 1, 2026 4:01 PM IST
ITC, which had 35.73 lakh small individual investors as of September 30, saw its shares slump to the lowest level since February 2023 after its market capitalisation eroded by about Rs 45,000 crore, following fresh excise duty hikes on cigarettes announced by the government.
The development is viewed as negative for cigarette manufacturers such as ITC, as higher duties are expected to weigh on volumes and revive concerns around potential volume migration to the illicit cigarette market. For the December quarter, Nuvama estimated ITC’s cigarette volumes growth at 5.5 per cent YoY. This was against 6 per cent YoY volume growth in the September quarter.
The government imposed excise duty in the range of Rs 2,050-8,500 per 1,000 sticks, based on the length of the products. These revised duty rates are scheduled to come into effect from February 1, 2026.
By 12.38 pm, ITC shares had fallen 10 per cent to hit an intraday low of Rs 362.70 apiece, the lowest level for the stock since the February 1, 2023 close of Rs 361.45. The company’s market capitalisation declined by Rs 45,104 crore to Rs 4,59,812 crore at last count. The stoc eventually settled at Rs 363.95 on Thursday, down 9.69 per cent.
As per shareholding data, Life Insurance Corporation of India held a 15.86 per cent stake in ITC, followed by SBI Mutual Fund with 3.26 per cent, ICICI Prudential Mutual Fund with 2.28 per cent, GQG Partners Emerging Markets Equity Fund with 2.10 per cent, and General Insurance Corporation of India with 1.73 per cent.
Jefferies has reportedly said that while it is still unsure on the final outcome, if confirmed, this would be a clear negative as volumes will be impacted and concerns would also re-emerge on risk of losing some volumes to illicit industry.
Jefferies, as per ET NOW, said that ITC would require to raise cigarette prices by at least 15 per cent to pass on the overall impact on consumers. The foreign brokerage said its calculations suggest the tax hike could be over 30 per cent if National Calamity Contingent Duty (NCCD) continues. Even if the duty is subsumed, the impact is seen above 20 per cent. It noted the revised GST rate on tobacco was recently raised to 40 per cent.
The government issued a fresh set of GST notifications that reshaped tax rates on tobacco products, doing away with the existing 28 per cent GST slab entirely. Tobacco items were reclassified and brought under either the 18 per cent or 40 per cent tax slabs, depending on the product category, under the revised CGST, IGST and UTGST schedules.
ITC, which had 35.73 lakh small individual investors as of September 30, saw its shares slump to the lowest level since February 2023 after its market capitalisation eroded by about Rs 45,000 crore, following fresh excise duty hikes on cigarettes announced by the government.
The development is viewed as negative for cigarette manufacturers such as ITC, as higher duties are expected to weigh on volumes and revive concerns around potential volume migration to the illicit cigarette market. For the December quarter, Nuvama estimated ITC’s cigarette volumes growth at 5.5 per cent YoY. This was against 6 per cent YoY volume growth in the September quarter.
The government imposed excise duty in the range of Rs 2,050-8,500 per 1,000 sticks, based on the length of the products. These revised duty rates are scheduled to come into effect from February 1, 2026.
By 12.38 pm, ITC shares had fallen 10 per cent to hit an intraday low of Rs 362.70 apiece, the lowest level for the stock since the February 1, 2023 close of Rs 361.45. The company’s market capitalisation declined by Rs 45,104 crore to Rs 4,59,812 crore at last count. The stoc eventually settled at Rs 363.95 on Thursday, down 9.69 per cent.
As per shareholding data, Life Insurance Corporation of India held a 15.86 per cent stake in ITC, followed by SBI Mutual Fund with 3.26 per cent, ICICI Prudential Mutual Fund with 2.28 per cent, GQG Partners Emerging Markets Equity Fund with 2.10 per cent, and General Insurance Corporation of India with 1.73 per cent.
Jefferies has reportedly said that while it is still unsure on the final outcome, if confirmed, this would be a clear negative as volumes will be impacted and concerns would also re-emerge on risk of losing some volumes to illicit industry.
Jefferies, as per ET NOW, said that ITC would require to raise cigarette prices by at least 15 per cent to pass on the overall impact on consumers. The foreign brokerage said its calculations suggest the tax hike could be over 30 per cent if National Calamity Contingent Duty (NCCD) continues. Even if the duty is subsumed, the impact is seen above 20 per cent. It noted the revised GST rate on tobacco was recently raised to 40 per cent.
The government issued a fresh set of GST notifications that reshaped tax rates on tobacco products, doing away with the existing 28 per cent GST slab entirely. Tobacco items were reclassified and brought under either the 18 per cent or 40 per cent tax slabs, depending on the product category, under the revised CGST, IGST and UTGST schedules.