ITC shares set to close lower for first time in five years, here's why

Shares of ITC are set to end the year 2025 on a negative note for the first time in five years. The FMCG stock slipped 12% in 2020. Since then, the stock had been closing in the green annually. In 2020, the stock clocked strong returns of 52. A year ago, the stock managed to rise 4.26% annually. In 2023 and 2024, the stock rose 39% and 5%, respectively.

However, the four-year gaining streak is set to break with a correction of 11.17% in 2025 till date. 

In two years too, the stock has fallen over 5%. ITC shares have been trading in a range for the last 6 months. It has moved between Rs 396.80 and Rs 421 during the period. 

The stock has corrected in 2025 primarily due to investor concerns over potential higher taxes on tobacco under new GST 2.0 regime. Significant stake sale by British American Tobacco (BAT) in the newly demerged ITC Hotels, has aloso affectd sentiment around the ITC stock. 

On the other hand, the FMCG stock has more than doubled investor wealth clocking 106% returns in five years. 

In the previous session, ITC shares closed on a flat note at Rs 406.65. Market cap of the firm stood at Rs 5.09 lakh crore. 

Amid the weakness on the ITC counter, here's a look at the outlook of the stock. 

Amruta Shinde, Research Analyst, Choice Broking said, "ITC is exhibiting early signs of a potential trend reversal. On the long-term charts, the stock continues to form a symmetrical triangle pattern, while prices have recently rebounded from lower levels. A decisive close above the 200-day EMA could act as a trigger for further upside and help confirm a broader bullish trend. In the near term, the stock appears well positioned to move toward Rs 430. Immediate resistance is placed at Rs 413, while strong support is seen near Rs 400. Traders may consider initiating long positions around Rs 407.35, targeting Rs 430 with a stop-loss at Rs 398, while maintaining disciplined risk management amid short-term volatility."

Global brokerage Macquarie has an outperform call on the stock with a price target of Rs 500. The brokerage believes that concerns on high per-stick taxes shared in draft excise document are misplaced, as such rates represent cap and not applicable rates.

It expects a potential moderation in discounting post move to GST as percentage of retail price and moderation in leaf tobacco costs driving 10% plus FY27E cigarette EBIT growth.

The brokerage has raised EPS/TP 2%/4% to factor these tailwinds. It believes that re-rating needs clarity that cigarette tax will not increase materially post levy of new cess.

Deven Choksey Research has a price target of Rs 486 on the FMCG stock. 

The brokerage said the management continued to step up brand investments and cost efficiencies to reinforce long-term profitability in the FMCG portfolio. 

The management expects softer leaf and input procurement costs in H2FY26E to support profitability recovery and sustain competitive trade interventions in the cigarette business, according to Deven Choksey Research.