ITC share price targets revised lower; focus shifts to cigarette price hikes
ITC share price: The excise duty hike on cigarettes from February 1 remained a key overhang, as it could boost illicit trade and hurt legal cigarette volumes and revenue.
- Jan 30, 2026,
- Updated Jan 30, 2026 9:20 AM IST
ITC Ltd reported an in-line December quarter, with revenue rising 5.7 per cent year-on-year (YoY), Ebitda improving 7.6 per cent YoY and cigarette volume growth at 7 per cent YoY, despite a base of 6 per cent. Analysts, however, said the excise duty hike on cigarettes from February 1 remained a key overhang, as it could boost illicit trade and hurt legal cigarette volumes and revenue. Investors, they said, were expected to closely track two to three rounds of cigarette price hikes likely over the next few months.
Nuvama said ITC's FMCG-Others delivered a strong quarter with 11 per cent YoY revenue growth and Ebitda margins expanding 145 basis points (bps) to 10 per cent, led by broad based category strength and continued outperformance in premium and NewGen channels. Agri business reported a decent quarter with revenue up 6.3 per cent YoY, driven by strong growth in Leaf Tobacco and robust traction in value-added agri products, led by aqua and coffee.
In the case of cigarette segment, India already has a large illicit cigarette market, about one-third of industry, and analysts said such an unprecedented tax hike risks accelerating down trading and illicit trade, reversing the recent volume recovery seen under tax stability.
"We believe this will pressurise legal industry volumes and hurt the broader value chain and is the primary reason we expect ITC’s cigarette volumes to dip in FY27/28E despite prior momentum," Nuvama said.
This brokerage cut its target price to Rs 365 for ITC from Rs 415 earlier.
In light of the near to medium term uncertainty linked to price hikes from February 1st, Antique Stock Broking cut its EV/Ebitda multiple for the cigarette business to 13 times from 16 times earlier.
"We broadly maintain our FY26-28E Ebitda estimates and Buy recommendation on the stock with a revised SoTP-based target price of Rs 408 (previously Rs 445) on FY28 estimates," it said.
Emkay Global maintained cautious stance on ITC, with 'Reduce' and target price of Rs 350.
"New GST (40 per cent of retail price) and Excise rates will be effective 1-Feb and demand healthy price hikes – we await action from category incumbents. We see legal volume under pressure, given the sharp hike quantum. Also, we expect pressure from illegal volumes ahead. Cigarette margins will see some comfort from easing in leaf tobacco, but the quest to protect volumes may call for staggered price hikes, which is likely to affect FY27 cig business margin," Emkay said.
ITC Ltd reported an in-line December quarter, with revenue rising 5.7 per cent year-on-year (YoY), Ebitda improving 7.6 per cent YoY and cigarette volume growth at 7 per cent YoY, despite a base of 6 per cent. Analysts, however, said the excise duty hike on cigarettes from February 1 remained a key overhang, as it could boost illicit trade and hurt legal cigarette volumes and revenue. Investors, they said, were expected to closely track two to three rounds of cigarette price hikes likely over the next few months.
Nuvama said ITC's FMCG-Others delivered a strong quarter with 11 per cent YoY revenue growth and Ebitda margins expanding 145 basis points (bps) to 10 per cent, led by broad based category strength and continued outperformance in premium and NewGen channels. Agri business reported a decent quarter with revenue up 6.3 per cent YoY, driven by strong growth in Leaf Tobacco and robust traction in value-added agri products, led by aqua and coffee.
In the case of cigarette segment, India already has a large illicit cigarette market, about one-third of industry, and analysts said such an unprecedented tax hike risks accelerating down trading and illicit trade, reversing the recent volume recovery seen under tax stability.
"We believe this will pressurise legal industry volumes and hurt the broader value chain and is the primary reason we expect ITC’s cigarette volumes to dip in FY27/28E despite prior momentum," Nuvama said.
This brokerage cut its target price to Rs 365 for ITC from Rs 415 earlier.
In light of the near to medium term uncertainty linked to price hikes from February 1st, Antique Stock Broking cut its EV/Ebitda multiple for the cigarette business to 13 times from 16 times earlier.
"We broadly maintain our FY26-28E Ebitda estimates and Buy recommendation on the stock with a revised SoTP-based target price of Rs 408 (previously Rs 445) on FY28 estimates," it said.
Emkay Global maintained cautious stance on ITC, with 'Reduce' and target price of Rs 350.
"New GST (40 per cent of retail price) and Excise rates will be effective 1-Feb and demand healthy price hikes – we await action from category incumbents. We see legal volume under pressure, given the sharp hike quantum. Also, we expect pressure from illegal volumes ahead. Cigarette margins will see some comfort from easing in leaf tobacco, but the quest to protect volumes may call for staggered price hikes, which is likely to affect FY27 cig business margin," Emkay said.