ITC Shares Hit Six-Year Low After Tax Hike; Over ₹50,000 Crore in Market Value Erodes

Shares of ITC Ltd were under heavy selling pressure in morning trade on Friday, slipping to their lowest level in nearly six years as investors reacted to the government’s decision to raise taxes on tobacco products. At around 10:24 am, the stock was trading deep in the red, significantly underperforming the broader market.

Sharp fall in early trade

ITC shares declined over 4% during intraday trade, extending losses from the previous session. The fall pushed the stock to levels last seen in 2019, making it one of the worst performers among frontline stocks. The sustained sell-off reflects concerns over the impact of higher taxes on the company’s earnings outlook.

Tax hike weighs on sentiment

The decline follows the government’s notification introducing higher excise duty on cigarettes, effective February 1, in addition to the existing Goods and Services Tax (GST). The revised structure replaces the earlier compensation cess regime.

Cigarettes remain ITC’s largest profit contributor, and the higher tax burden has raised concerns about pricing power, demand sensitivity and margin pressure in the near term.

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Over ₹50,000 crore wiped off valuation

The sharp correction resulted in over ₹50,000 crore being erased from ITC’s market capitalisation within a short span, as investors reassessed the stock’s risk-reward profile following the tax announcement.

Other tobacco-linked stocks also witnessed selling pressure, indicating broader sector-wide concerns.

What investors are tracking next

Market participants are now watching how ITC responds through price adjustments and cost management, and whether its non-tobacco businesses can help cushion the impact of higher taxes. Further clarity on volumes and earnings guidance will remain key triggers for the stock.

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