ITC Shares Hit 52-Week Low After Weak Q3 Results; Budget Tax Hike Fears Weigh, Brokerages Turn Cautious

ITC share price slipped to a 52-week low on Friday, as investors reacted negatively to the FMCG major's unimpressive Q3 earnings performance and growing concerns over a possible steep hike in cigarette taxes in the upcoming Union Budget 2026.

The stock has been trading range-bound this morning since the results announcement on post-market hours on Thursday.

ITC shares today are trading flat at Rs. 321.60 apiece on the NSE rising by 0.94%. The stock has already slipped 11% so far in January and about 19.68% over the last 30 days of trading.

ITC Q3 Results Snapshot

For the December quarter of FY26, ITC reported a 6.1% year-on-year decline in net profit to Rs. 5,088 crore, compared with Rs. 5,421.3 crore in the same period last year.

However, the company's topline and operating performance remained stable. Revenue rose 5.7% YoY to Rs. 18,017 crore from Rs. 17,052.8 crore. The EBITDA increased 7.6% YoY to Rs. 6,271 crore while the EBITDA margin improved to 34.8% from 34.2% YoY.

While margins improved slightly, the profit decline dampened investor enthusiasm.

Segment-Wise Performance

ITC's cigarette business showed some strength with net revenue growing 8% YoY, while volumes rose 7% YoY,This came on a favourable base of 6%, indicating healthy demand in the legal cigarette segment.

The FMCG segment delivered strong performance, with revenue growth of 11% YoY. However, other segments remained mixed. The paperboards, paper and packaging (PPP) business saw revenue growth of 2.7% YoY, but EBIT declined 4% YoY. The agri business posted 6.3% YoY growth in revenue, while EBIT rose 2.8% YoY.

Budget Tax Hike Risk Clouds Outlook

Despite decent operating numbers, ITC flagged concerns over the risk of higher cigarette taxes in the upcoming Budget 2026, which has become a key overhang for the stock. Any sharp increase in taxes could lead to price hikes, lower volumes and a rise in illicit trade, which is expected to have a major impact on the legal cigarette market.

What Brokerages Are Saying: ITC Shares Target Price

Centrum Institutional Research in its report dated Jan 30 said that ITC shares have corrected around 21% in the last one month, mainly due to concerns over higher taxation.

"While valuations look attractive, we are on the fence given no near- to medium-term trigger for business momentum. We expect cigarette volumes and profitability to remain under pressure in FY27," Centrum said. The brokerage has maintained a NEUTRAL rating with a target price of Rs. 355.

Nuvama Institutional Equities also flagged risks from sharp cigarette tax hikes. The brokerage cut its FY27 and FY28 earnings estimates by 4% each and revised its target price to Rs. 365 from Rs. 415, while retaining a HOLD rating.

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