ITC Ltd’s share price has remained under pressure in 2025, weighed down by multiple structural and sectoral headwinds, including British American Tobacco (BAT) trimming its stake, continued concerns over a 40% GST slab on “sin” goods, weakness in the FMCG sector, and investor caution ahead of the ITC Hotels demerger.
The stock has declined nearly 12% year-to-date, underperforming the benchmark Sensex, which has gained around 8% during the same period. Over a two-year horizon, ITC shares are down about 6%, although the company has delivered a strong return of over 105% in the past five years, highlighting its long-term wealth creation potential despite recent volatility.
Why ITC Shares Are Underperforming
Several factors have contributed to the subdued performance of ITC shares this year:
- BAT stake sale: British American Tobacco’s gradual reduction in its holding has created an overhang on the stock, adding to supply pressure.
- High GST on cigarettes: The continued 40% GST slab on cigarettes has kept sentiment cautious, even as tax rates have remained relatively stable in recent years.
- FMCG sector correction: Broader weakness in FMCG stocks amid margin pressures and uneven consumption recovery has impacted ITC’s non-cigarette businesses.
- ITC Hotels demerger: Uncertainty around valuation, timelines and post-demerger performance has led to cautious positioning by investors.
Business Performance and Structural Strength
Despite short-term pressure on the share price, ITC continues to benefit from its diversified business model, with cigarettes providing stable cash flows and supporting investments in FMCG, paperboards, agribusiness and hotels.
The paperboards and packaging segment has faced challenges from imports and input costs, but policy measures such as minimum import prices and anti-dumping duties have offered some relief. Meanwhile, expectations of higher government spending, income tax relief and consumption-led growth could support demand across multiple segments over the medium term.
Technical Levels to Watch
From a market structure perspective, ITC shares are currently consolidating within a defined range, indicating a pause after earlier gains.
- Support levels: ₹398 in the short term, with a stronger long-term base around ₹370
- Resistance zones: ₹412–418 in the near term, followed by ₹440–460 and the previous highs near ₹490–500
Market participants are closely tracking these levels to assess the next directional move.
Long-Term View
While near-term sentiment remains cautious due to global uncertainty and stock-specific factors, ITC’s strong balance sheet, diversified revenue streams and steady cash generation continue to underpin its long-term relevance in Indian equity markets.
The stock’s current phase reflects consolidation rather than a breakdown, as investors await greater clarity on consumption recovery, policy direction and post-demerger dynamics.
Disclaimer
This article is for informational purposes only. It does not constitute investment advice, stock recommendations or solicitation to buy or sell securities. Stock market investments are subject to market risks. Readers should rely on publicly available information and exercise due diligence.
