ITC stock: LIC loses Rs 11K cr notionally in 2 days on cigarette excise duty hike
LIC's holding value in ITC, thus, fell to Rs 69,498.57 crore from Rs 80,079.84 crore on Wednesday, a fall of Rs 10,581 crore in two days. LIC has been keeping its stake in ITC in the 15-16 per cent range at least since 2017.
- Jan 2, 2026,
- Updated Jan 2, 2026 12:41 PM IST
Life Insurance Corporation of India (LIC), a long-term investor and the second-largest shareholder in ITC Ltd, with 15.86 per cent stake as of September 30, has seen its notional value of investments falling nearly Rs 11,000 crore in two sessions. At 12 pm, ITC shares were trading 3.86 per cent lower at Rs 349.90 apiece. This was in addition to a 9.7 per cent drop in the previous session.
LIC's holding value in ITC, thus, fell to Rs 69,498.57 crore from Rs 80,079.84 crore on Wednesday, a fall of Rs 10,581 crore in two days. LIC has been keeping its stake in ITC in the 15-16 per cent range at least since 2017. It has been an investor in ITC at least since 2022, as per data compiled with AceEquity.
Tobacco Manufacturers (India) owned 17.79 per cent stake in ITC and is the largest shareholder in the FMCG firm. Other prominent shareholders included 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.
As per the central excise notification, the union government has revised taxation structure for Cigarettes, applicable from February 1, 2026, where in base GST rate has moved to 40 per cent from 28 per cent currently and a new basic excise duty per 1000 stick is introduced against fixed cess and ad valorem rate per 1000 stick earlier. The NCCD per 1000 stick remains unchanged.
"If the duty rates are implemented, we see this as significant negative for ITC as sharp duty hike will: a) negatively impact volumes and meaningfully impact Cigarette EBIT, b) mix could see deterioration and c) concerns on illicit cigarette will also re-emerge," JM Financial said.
Emkay Global cut its rating on ITC to Reduce from Add, as it viewed the proposed cigarette excise duty rates as hurting the near to medium term outlook. The brokerage suggested a target price of Rs 350 for December 2026 estimate, down from Rs 475 for September 2026 estimate, after it cut its earnings estimates to factor in the impact of the tax increases.
Tax stability had impacted the illicit cigarette market, with its volume share contracting by about 150 basis points over the past four to five years. Motilal Oswal Financial Services said ITC benefited from this period, as its cigarette volumes recorded a five per cent compound annual growth rate over the past five years, while the stock had risen more than 50 per cent.
Life Insurance Corporation of India (LIC), a long-term investor and the second-largest shareholder in ITC Ltd, with 15.86 per cent stake as of September 30, has seen its notional value of investments falling nearly Rs 11,000 crore in two sessions. At 12 pm, ITC shares were trading 3.86 per cent lower at Rs 349.90 apiece. This was in addition to a 9.7 per cent drop in the previous session.
LIC's holding value in ITC, thus, fell to Rs 69,498.57 crore from Rs 80,079.84 crore on Wednesday, a fall of Rs 10,581 crore in two days. LIC has been keeping its stake in ITC in the 15-16 per cent range at least since 2017. It has been an investor in ITC at least since 2022, as per data compiled with AceEquity.
Tobacco Manufacturers (India) owned 17.79 per cent stake in ITC and is the largest shareholder in the FMCG firm. Other prominent shareholders included 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.
As per the central excise notification, the union government has revised taxation structure for Cigarettes, applicable from February 1, 2026, where in base GST rate has moved to 40 per cent from 28 per cent currently and a new basic excise duty per 1000 stick is introduced against fixed cess and ad valorem rate per 1000 stick earlier. The NCCD per 1000 stick remains unchanged.
"If the duty rates are implemented, we see this as significant negative for ITC as sharp duty hike will: a) negatively impact volumes and meaningfully impact Cigarette EBIT, b) mix could see deterioration and c) concerns on illicit cigarette will also re-emerge," JM Financial said.
Emkay Global cut its rating on ITC to Reduce from Add, as it viewed the proposed cigarette excise duty rates as hurting the near to medium term outlook. The brokerage suggested a target price of Rs 350 for December 2026 estimate, down from Rs 475 for September 2026 estimate, after it cut its earnings estimates to factor in the impact of the tax increases.
Tax stability had impacted the illicit cigarette market, with its volume share contracting by about 150 basis points over the past four to five years. Motilal Oswal Financial Services said ITC benefited from this period, as its cigarette volumes recorded a five per cent compound annual growth rate over the past five years, while the stock had risen more than 50 per cent.