ITC shares fell 1.8% to an intraday low of ₹302.25 on Friday as the stock reacted to its Q4 results, with the stock trading 1% lower at ₹304 at 11 AM. According to Religare Broking's Ajit Mishra, the price reaction was primarily due to cautious future guidance given by the company's management. The stock has declined 3.4% thus far in May and shed as much as 24% this calendar year, significantly underperforming the NSE Nifty which has slipped 1% and 9% in the same periods. Mishra notes that ITC has consistently traded below its long-term moving averages—both 100-DMA and 200-DMA since January 1, 2026, following the massive fall after a steep GST hike to 40%.
ITC shares fell over 1% on May 22 despite reporting a marginal rise in quarterly adjusted profit, as price increases in the core cigarette business cushioned some of the impact of a tax hike. According to latest reports, the company's profit before exceptional items and tax rose 4.3% to ₹6,692 crore in the March quarter, with revenue from cigarettes business rising about 32% to ₹11,066 crore. Overall revenue climbed 17% to ₹21,695 crore, though shares were trading 1.2% lower at ₹304.2 at 12:05 pm on May 22. The decline reflects investor concerns about the real test in Q1FY27 when the impact of sharp tax hike will be visible, as price hikes are only partial while volumes and margins will be affected.
As reported by Prabhudas Lilladher, ITC reported in-line numbers enabled by strong growth in FMCG and Paperboard segments, while the Cigarette business sustained profitability. However, the brokerage expects severe pressure on volumes and profitability as the full impact of sharp increase in excise duty and subsequent price hikes play out. The company also anticipates downtrading in Kings and RSFT brands which can deteriorate the sales mix, leading to gradual but delayed recovery once a base is settled. Latest results show cigarette EBIT grew 7.2% YoY in Q4FY26, though this was supported by one-off inventory gains on pre-tax revision stock, with competitive pressure from illicit cigarettes taking a toll on the formal cigarette industry.
The consumer goods segment logged 15% growth in revenue with EBITDA margin rising more than 200 percentage points to 11%, driven by broad-based growth across categories including Aashirvaad, Sunfeast and Bingo brands. However, the agri business revenue fell about 16% due to significant disruption triggered by tariff measures imposed by the U.S. and challenges from the Iran war, affecting trading, sourcing and exports of commodities such as rice, coffee and leaf tobacco. The company faced sharp rise in raw material costs including edible oil, soap noodles and packaging inputs due to supply chain disruptions and logistical challenges from the Middle East conflict.
Ajit Mishra of Religare Broking expects ITC to further consolidate, likely in the range of ₹280-330 in the coming months, with the downside capped around ₹280-₹290 for now. The analyst notes that despite the recent bounce from levels of ₹287 to ₹310-odd levels, the overall texture for ITC remains negative. ICICI Securities maintains an 'Add' rating on ITC with target price of ₹350 per share, while Jefferies has a Hold rating with target price of ₹350, noting that the real test is in Q1FY27 when tax hike impact will be visible. Citi maintains Sell rating with target price of ₹290, highlighting that Q4 performance is not directly comparable due to mid-quarter cigarette taxation changes.
