Diversified conglomerate ITC saw its shares continue to crash on Dalal Street in 2026, hitting multi-year lows as investors appeared to be worried that elevated commodity prices and input costs could hit the company’s margins in the near term, with analysts expecting more price hikes to protect margins and the top line.
The Government of India earlier this year imposed a higher excise duty on cigarettes, while ITC has raised prices across several cigarette brands. Although this is expected to improve realizations, the Street remains worried that higher prices could result in a sharper decline in cigarette volumes.
Following the excise duty setback, surging key input prices, such as sugar, copra and palm oil, have sent the stock into a tailspin. In August, the stock hit a three-year low before seeing some modest recovery in September. The shares began the year with a massive drop of 20% in January, and the weakness persisted in the subsequent months, resulting in a 34% drop so far.
The fall not only created significant wealth erosion for shareholders but also wiped out ₹1.72 lakh crore in the company’s market capitalization, which fell to ₹3.32 lakh crore at Tuesday’s close.
To be precise, the stock came under pressure after touching a record high of ₹499 in September 2024 and has so far lost 47% from that peak.
For a blue-chip stock, this kind of fall is a rare occurrence, but it highlights the deepening concerns.
What are brokerages saying about ITC after the recent fall?
In its recent report, domestic brokerage firm 360 ONE Capital Research has maintained its ‘buy’ rating on ITC with an unchanged target price of ₹440 per share. The brokerage believes the recent weakness has created an opportunity as the impact of cigarette price increases starts flowing through profitability.
At the same time, the brokerage expects support from FMCG, paperboards and packaging, agri and ITC’s technology businesses.
The brokerage highlighted that the stock has been range-bound over the last two months, driven by uncertainties related to the impact of recent tax hikes on overall cigarette volumes.
However, it said that in the current industry dynamics, the pricing lever has more weight than the volume lever, which should offset the decline in volumes that is expected to follow, as the company has been consistently raising prices across well-known brands in a staggered and phased manner.
Meanwhile, Japanese brokerage firm Nomura has also maintained its ‘BUY’ rating on the stock. “Most raw material prices, except for Brent and HDPE, have either remained range-bound or softened m-m in September. However, they are still up q-q/y-y at levels materially above the product price hikes taken by consumer companies in 1QFY27,” Nomura said in its September 28 report.
Sugar prices corrected sharply, falling 8% month-on-month and 21% from their peak, but remain up 18% year-on-year, potentially pressuring margins for Britannia, Nestle, Dabur, ITC and HUL.
Meanwhile, HDFC Securities has maintained an ‘ADD’ call on the Nifty 50 stock and suggested a share price target of ₹300.
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