Synopsis : ITC shares have plunged nearly 23% in 2026 and touched a fresh 52-week low as concerns over higher cigarette taxes weigh on sentiment. Despite the sharp correction, most analysts believe the stock remains a long-term play for investors seeking stability, dividends, and FMCG growth.
For decades, ITC has been one of the most widely held stocks among Indian investors. Known for its consistent dividend payouts and strong cash flows, the company has earned the reputation of being the market’s "Dividend King." However, after a steep correction over the past year, investors are increasingly questioning whether ITC still deserves a place in their portfolios.
The stock recently hit a fresh 52-week low of Rs.275.05 and has declined nearly 33% over the past year, raising concerns about its future growth trajectory.
- ITC Shares Under Pressure After Cigarette Tax Hike
The biggest trigger behind ITC's recent decline has been the government's decision to significantly increase cigarette excise duties earlier this year.
The stock has fallen around 23% in 2026 as investors worry about the impact on the company’s most profitable business segment.
According to Sunny Agrawal, Head of Fundamental Research at SBI Securities, cigarettes contribute approximately 41% of ITC’s revenue but account for a substantially larger share of profits.
The higher tax burden could lead to cigarette price hikes, affecting consumption patterns and potentially increasing competition from illicit tobacco products.
- Cigarette Business Remains the Key Risk
Analysts believe the regulatory environment surrounding cigarettes will remain the primary overhang for the stock in the near term.
Why It Matters
- Cigarettes remain ITC’s largest profit contributor
- Higher taxes could impact volume growth
- Earnings visibility becomes less certain
- Regulatory risks remain elevated
Sunny Agrawal noted that while cigarettes continue to generate strong cash flows, the taxation-related uncertainty limits the stock's immediate upside potential.
- FMCG Business Is Slowly Changing the Story
Despite being synonymous with tobacco, ITC has spent years building a diversified consumer goods business.
The company's FMCG portfolio now spans packaged foods, personal care products, beverages, and household essentials.
According to analysts, this segment is becoming an increasingly important growth driver.
FMCG Growth Highlights
- Double-digit revenue growth in FY26
- Improving profitability and margins
- Reduced dependence on cigarettes over time
- Strong brand portfolio across categories
However, experts point out that the FMCG division still has room to improve its profitability compared to established consumer goods leaders.
- Is the ‘Dividend King’ Still Worth Holding?
One of ITC’s biggest attractions remains its ability to generate strong cash flows and reward shareholders through dividends.
Vincent K A, Senior Research Analyst at Geojit Investments, believes the company's dividend story remains intact despite current challenges.
According to him, the recent stock correction reflects temporary pressures rather than structural weaknesses.
He highlighted that ITC has successfully navigated similar taxation cycles in the past through calibrated price increases and operational efficiencies.
For long-term investors, he remains constructive and suggests accumulating the stock on declines.
- Market Veterans Say Patience Is Key
Market expert Ambareesh Baliga believes the current downturn is primarily linked to the unusually large cigarette duty increase announced this year.
According to him, cigarette volumes typically weaken immediately after tax hikes before gradually stabilising.
While he expects the normalisation process to take longer this time due to the magnitude of the duty increase, he remains optimistic about the long-term outlook.
- Baliga’s Key View
Near-term pressure likely to persist
Impact could normalise over the next 1–2 quarters
Cigarette business remains a strong cash generator
FMCG business can become a larger earnings contributor over time
His recommendation remains clear: ITC continues to be a "buy-on-dips" stock for patient investors.
- What Technical Charts Are Signalling
Technical analysts remain cautious on the stock's short-term outlook.
According to Hitesh Tailor of Choice Broking, ITC continues to trade below key moving averages, indicating a weak trend.
Key Technical Levels
- Resistance Zone: Rs.300–Rs.310
- Immediate Support: Rs.270
- Major Support: Rs.250
As long as the stock remains below the Rs.300–Rs.310 range, technical indicators suggest caution in the near term.
- Hold, Buy, or Sell? What Analysts Recommend
Reasons to Hold ITC
- Strong dividend track record
- Robust cash generation
- Growing FMCG business
- Attractive valuations after correction
- Long-term earnings diversification
Reasons for Caution
- Higher cigarette taxation
- Regulatory risks remain elevated
- Weak technical trend
- Near-term earnings pressure
- Analyst Verdict
Most experts are not recommending an outright exit. Instead, they view the current correction as a phase of adjustment following the cigarette tax hike. While near-term upside may remain limited, long-term investors with patience may continue holding or gradually accumulate on declines.
- Conclusion :
ITC’s recent decline has been driven largely by concerns surrounding higher cigarette taxation, which directly impacts its most profitable segment. However, analysts believe the company’s strong cash flows, reliable dividend payouts, and growing FMCG business continue to support its long-term investment case.
While technical indicators suggest caution in the short term, most market experts remain constructive on ITC for patient investors and continue to view the stock as a potential buy-on-dips opportunity rather than a sell candidate.
Disclaimer : This article is for informational purposes only and should not be considered investment advice. Investors should conduct their own research and consult a SEBI-registered financial advisor before making any investment decisions.
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