ITC shares crash as tax hikes and high input costs wipe out massive market value

ITC shares dropped sharply in 2026, hitting multi-year lows and erasing ₹ 1.72 lakh crore in market value as the company faced higher cigarette taxes and rising raw material costs.

Market Impact

The stock fell 34% so far this year, with market capitalization dropping to ₹ 3.32 lakh crore by Tuesday's close. This decline follows a record high of ₹ 499 in September 2024, putting the stock down 47% from that peak. Rising prices for key inputs like sugar, copra, and palm oil added to the pressure, coming on top of higher excise duties on cigarettes imposed by the Government of India earlier in the year.

Brokerage Views

Despite the slump, domestic brokerage 360 ONE Capital Research kept a 'buy' rating and a target price of ₹ 440, noting that price increases will help protect profits. Japanese firm Nomura also kept a 'BUY' rating, pointing out that raw material costs remain high compared to product price hikes. Meanwhile, HDFC Securities maintained an 'ADD' call with a target price of ₹ 300.

Context

Large consumer goods companies often face margin pressure when agricultural input prices and government taxes rise at the same time. While raising prices can protect profit margins, it risks reducing the total volume of goods sold if consumers cut back.