ITC stock 2026: GST 2.0 tax hike sinks near ₹275 low

Why ITC is back in focus

ITC Limited, which commands over 75% of India’s cigarette market, has seen a sharp reset in investor expectations after a major tax overhaul on cigarettes. The stock fell steeply after the government notified a revised cigarette excise duty structure, with the changes effective February 1, 2026. Market participants have linked the decline to concerns around potential volume pressure, margin compression, and earnings revisions. The stock’s slide also coincided with foreign institutional investor outflows and a broader slowdown in FMCG demand, according to the provided details. Several brokerages responded with downgrades and target price cuts, signalling a tougher near-term setup. Against this backdrop, investors have been watching whether ITC is nearing a bottom, especially as some technical indicators point to oversold conditions.

What changed: GST 2.0 and excise on cigarettes

The trigger across the updates is a surprise regulatory reset in cigarette taxation. The government, on December 31, 2025, notified a new tax structure for tobacco and pan masala products, described as levies in the 20% to 55% range. It also raised the GST rate on cigarettes from 28% to 40%. Separately, the finance ministry’s notification of a revised cigarette excise duty structure was referenced as effective from February 1, 2026. One summary in the text described GST 2.0 as an “unprecedented 60% to 65% cigarette tax increase,” and Motilal Oswal referred to “GST 2.0” as one of the most disruptive regulatory resets in the cigarette industry’s history.

Price action: from ₹400-plus levels to multi-year lows

Multiple price snapshots in the text show a sustained drawdown across weeks and months. ITC traded around ₹349 to ₹350 on January 2, 2026, after being above ₹400 just days earlier, as per the provided account. It later hit fresh 52-week lows around ₹345.25 to ₹345.35 in early January after a two-day rout that wiped out nearly 14% of market value. Another update said ITC shares fell to ₹275.05 intraday on June 4, down 33% over one year and 23% year-to-date. Separately, the stock was described as trading near a 52-week low of ₹318 reached on January 27, 2026, and a different reference mentioned a 52-week low of ₹302 hit on February 2, 2026. The text also noted a 52-week low of ₹287 on March 30, levels last seen in early 2023.

Returns scoreboard: short-term pain, mixed long-term picture

The historical returns listed for ITC show weakness across most recent periods. The stock’s 1-month return was stated as -2.14%, and the 3-month return as -5.66%. The 1-year return was reported as -32.82%, and the 3-year return as -40.31%. Over five years, the return was listed as +39.58%, indicating the longer-term period still remains positive in that specific window.

The text also included other performance summaries that point to a broad downtrend over multiple horizons. It said ITC stock “fell 30% in FY26 with 70% of correction coming alone in 2026,” and that investors lost nearly ₹2.36 lakh crore in FY26. Another part said the stock is in a downtrend both in the short and long term and has closed below ₹300 for nine straight sessions.

Street view: consensus leans to Buy and Hold

A market consensus split was cited as 42.86% Buy, 42.86% Hold, and 14.29% Sell. Another line stated that “40% of analysts rate it a Buy and 43% rate it a Hold,” pointing to a similar broad distribution. A separate sentiment gauge in the text showed “Bearish 8, Bullish 5, Neutral 2,” though the methodology was not detailed beyond being based on publicly available news, publications, brokerage expectations, and market data.

An “AI opinion” summary in the text described the stock as “HOLD,” with “Risk medium,” and “Conviction 5/10,” stating it is “worth holding, not adding.” It also cited ITC trading at a price-to-earnings multiple of 17.4x, an attractive 4.98% dividend yield, and a debt-free balance sheet, while also flagging a sharp -40% TTM profit decline and a -30% one-year stock CAGR as near-term headwinds.

Brokerage targets: cuts, downgrades, and divergent upside

Target prices and ratings in the text show a wide range, reflecting uncertainty around how quickly the cigarette business can absorb higher taxes.

Motilal Oswal was cited in one section as maintaining a neutral rating but cutting its target from ₹330 to ₹300, citing no near-term positive catalyst and describing GST 2.0 as highly disruptive. In another update after the early January excise notification, Motilal Oswal Financial Services downgraded ITC to Neutral from Buy and cut its target price to ₹400.

Other brokerage views cited include: Systematix with a Hold call and target price of ₹355; Kotak Institutional Equities with a Reduce rating and target prices cited at ₹338 and ₹350 in different updates; and CLSA retaining Outperform while trimming its target price by 24% to ₹367 from ₹485. UBS was cited with a buy call and a ₹395 target, while Sharekhan was described as positive with a ₹400 target, and Antique Broking was cited with a ₹408 target. JP Morgan was reported to have cut its target to ₹375 from ₹475 and downgraded to Neutral. Nuvama was cited with a Hold rating and a ₹415 target, and Emkay downgraded to Reduce from Add with a ₹350 target. Nomura was cited as having a ₹340 target in market discussions.

Technical levels: support near ₹300 and resistance above ₹345

Technical commentary in the text highlighted oversold conditions and key price zones. ITC was described as “heavily oversold” with an RSI of 18.5. Support zones referenced include ₹320 to ₹325 as a stabilisation band, and broader support around ₹300, with another range of ₹270 to ₹250 cited as support. Resistance zones cited include ₹300 to ₹310, and also ₹345 to ₹350 as near-term resistance, followed by a supply zone around ₹365 to ₹373. A higher resistance level of ₹375 was repeatedly referenced as a line the stock would need to break and sustain above for the trend to improve.

Some analysts projected deeper downside levels if the breakdown patterns play out. One view cited a Head-and-Shoulders breakdown below the ₹380 neckline, with a measured implication near ₹265, aligning with a rising 200-month moving average around ₹250 to ₹260.

What investors are watching next: Q1 FY27 and pricing response

The text flagged Q1 FY27 as an important checkpoint for the market to gauge the true volume and margin impact of GST 2.0. It also stated that any recovery is contingent on cigarette pricing normalisation over one to two quarters and continued scaling in FMCG. At the same time, it noted that ITC’s FMCG and agriculture segments show consistent revenue growth, but the lack of short-term triggers could keep pressure on the stock.

One cited bullish view from G Chokkalingam of Equinomics Research maintained a Buy with a ₹377 target, pointing to upcoming cigarette price hikes, strong agri performance, and a dividend yield cited at 5.1%. In contrast, other brokerages highlighted the near-term disruption risk from tax changes and the potential for consumers down-trading to cheaper variants, which could lead to volume de-growth.

Key facts table

Market impact: how the tax reset fed into valuation and sentiment

The sequence described in the text shows a swift repricing after the tax changes were announced, with international brokerages immediately cutting ITC targets by 20% to 35% on fears of down-trading and volume de-growth. The stock also saw a cluster of downgrades and valuation resets, including a reduced valuation multiple for tobacco cited at 17 times forward earnings by one brokerage note, and a de-rating of the cigarette business to 13 times earnings in another update. ITC’s dividend yield and debt-free balance sheet were repeatedly cited as anchors for income-oriented investors, but the near-term debate has centred on how much price increase is needed to protect net realisations.

Analysis: why the next few quarters matter

The text frames GST 2.0 and excise changes as a near-term shock that can affect pricing, volume mix, and margins, which is why Q1 FY27 is positioned as a key proof point. Technical commentary suggests the stock remains in a bearish structure until it clears key resistance levels, while also acknowledging that selling intensity may be easing near certain support bands. Broker targets range widely, indicating the market is not aligned on the pace of recovery, even if there is agreement that taxes have reset the earnings and valuation framework. The updates also show that while ITC’s non-cigarette segments are noted as growing, the cigarette business remains central to market perception given its scale and the regulatory sensitivity.

Conclusion

ITC’s stock correction, downgrades, and shifting technical levels have largely been tied to GST 2.0 and the excise duty reset on cigarettes, with investors now focused on how pricing and volumes adjust. The next major datapoint highlighted is Q1 FY27, which is expected to reveal the volume and margin impact and shape the market’s view on normalisation over the following one to two quarters.