It has not been a happy New Year for ITC shareholders. The cigarettes-to-FMCG conglomerate has seen its stock tumble 14% in two days to its lowest level in three years, hurt by the government’s announcement of a steep hike in the excise duty on tobacco products. This has resulted in the overall wealth evaporation of nearly ₹72,300 crore for ITC shareholders.
ITC’s stock price recorded its worst one-day fall in nearly six years as it crashed 10% on Thursday. The blue-chip stock further saw a 5% decline in trade today to a fresh 52-week low of ₹345.25 on the NSE.
ITC shares downgraded!
Following the government order, at least 11 brokerages, including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley, downgraded the stock, suggested the Reuters report.
Domestic brokerage Nuvama Institutional Equities said it is cutting the EBITDA by 7% each for FY27E/28E and downgrading ITC stock to ‘HOLD’ from ‘BUY’, with a target price of ₹415.
Meanwhile, Motilal Oswal Financial Services (MOSL) said that earnings pressure on cigarettes would take away the near-term catalysts (soft tobacco prices, recovery in FMCG and Paper) and comfort on valuation.
It now values the cigarette business at 14x Dec’27E EV/EBITDA as against the earlier valuation multiple of 17x. It also downgraded the rating from ‘BUY’ to ‘Neutral’ with a revised SoTP-based target price of ₹400.
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