Shares of ITC fell over 2% on January 6, extending their sharp decline to nearly 15% over the past four trading sessions, after the government announced a fresh increase in excise duty on cigarettes. The stock touched a new 52-week low of ₹337.75 during the session before trimming losses to close at ₹343.25.
The recent sell-off has led to a steep erosion of around ₹82,000 crore in ITC’s market capitalisation within just four days. Despite the correction, ITC remains widely regarded as a high-dividend stock, having paid a total dividend of ₹14.35 per share in FY25. As of January 6, 2026, the stock offers a dividend yield of about 4.10%.
Why ITC shares are falling:
The decline follows Parliament’s approval of the Central Excise (Amendment) Bill, 2025, in December, paving the way for higher duties on cigarettes and other tobacco products. The move replaces a temporary levy with a permanent excise structure.
As per the finance ministry’s notification, cigarettes will attract excise duty ranging from ₹2,050 to ₹8,500 per 1,000 sticks, depending on length, effective February 1. This duty will be levied in addition to the existing 40% GST.
The revised tax structure is expected to increase overall costs for certain cigarette categories by 22–28%, particularly for 75–85 mm cigarettes. Longer cigarettes account for a meaningful share of ITC’s cigarette volumes and may see price hikes of ₹2–3 per stick due to the higher levy.
Stock trend:
ITC shares are currently trading below key long-term averages, indicating continued pressure on the stock. Key support is seen around the ₹330 zone, while any recovery may face resistance near ₹360 and higher levels. Market participants remain cautious as the stock adjusts to the impact of higher taxation on its core cigarette business.
Disclaimer:
This content is for informational purposes only and should not be considered investment advice. Readers should consult a qualified professional before making any financial decisions.
