ThinkScopeInvestors are facing a jolt as ITC shares plummeted to their lowest point in nearly two years. The sharp decline is attributed to an unexpected announcement by the Finance Ministry that will see a significant increase in excise duty on cigarettes, tobacco, and bidis. This comes as part of a broader effort to curb smoking and increase government revenue from these products.
The Finance Ministry's decision to impose a 40% Goods and Services Tax (GST) on tobacco products beginning in February 2026 has left investors re-evaluating their positions. The move is expected to impact ITC's profitability, which heavily relies on its tobacco business. Traders reacted swiftly, resulting in a block deal that further exacerbated the fall in ITC's stock price.
While the excise duty hike aims to discourage tobacco consumption and align with health goals, it also brings uncertainty to ITC's future revenue streams. The company has been attempting to diversify its portfolio beyond tobacco, venturing into sectors like FMCG and hospitality, but the core tobacco business remains a significant contributor to its bottom line.
Market analysts are keeping a close watch on ITC's strategic responses to these regulatory changes. Whether through accelerated diversification or innovative product development, ITC will need to adapt swiftly to mitigate the financial impact. Investors are hopeful for a strategic pivot that could stabilize the stock and restore confidence in the company's growth trajectory.
