ITC gains 3%, outperforms Sensex in recent market fall; here's why

Analysts believe ITC's long-term growth trajectory remains intact, with non-cigarette business segments maintaining steady progress.

ITC share price today

 

Share price of ITC surged 3.5 per cent to ₹308.60 on the BSE in Friday’s intra-day trade amid heavy volumes. 

 

Since February 27, in the recent market downfall due to West Asia conflict, the stock price of the diversified fast moving consumer goods (FMCG) company has outperformed by declining less than 2 per cent. In comparison, the BSE Sensex has slipped 9 per cent during the same period.

 

At 12:54 PM; ITC stock was quoting 3.2 per cent higher at ₹307.45, as compared to 0.89 per cent rise in the BSE Sensex. A combined 19.83 million equity shares changed hands on the NSE and BSE. The stock had hit a 52-week low of ₹297.10 on Thursday, March 19, 2026.  FOLLOW LATEST STOCK MARKET UPDATES LIVE

 

ITC underperforms thus far in calendar year 2026

ITC is diversified consumption play with presence in businesses such as cigarettes, FMCG, Agri and Paperboard, Paper & Packaging (PPP) in India. 

Thus far in the calendar year 2026, ITC has underperformed the market by falling 15 per cent, as against 12.2 per cent decline in the BSE Sensex. Underperformance in the stock price of ITC was due to a significant increase in the tax rate on cigarettes in the range of 20-55 per cent (depending on various sizes) after a brief period of stable tax environment over FY22-25. 

Significant tax hike in cigarettes and its expected impact on the ITC’s cigarette business in the coming quarters will continue to put on the valuations of the company, said analysts at ICICI Securities. 

However, analysts at Axis Securities believe ITC’s long-term growth trajectory remains intact, with non-cigarette business segments maintaining steady progress.  

Cigarette volumes will be impacted in the medium term due to an increase in the tax rate. The legal cigarette industry continues to engage with policymakers on taxation policies that balance the country's economic imperatives and tobacco control objectives. The government budgetary measures, the recent GST rate reduction, an expanding outlet network, localisation initiatives, and a continued premiumisation focus are expected to further drive overall growth in FY27, the brokerage firm said.  Historically, punitive taxes in prior years accelerated this illegal trade, posing risks to public health and law enforcement, while recent tax stability had helped curb it, boost legal volumes, and enhance demand for Indian tobaccos. To neutralize the impact, ITC has to take a 37 per cent overall increase in cigarette price, as per Elara Securities calculation. The brokerage firm in the Q3 result update said they expect this to be gradual and ITC would explore longs (72mm) as well to reduce the overall incidence.  READ | Tyre stocks skid up to 18% in March; can slip another 24%, cautions analyst

Brokerages view on India Consumer/FMCG sector

Nomura believes consumer companies will have a limited impact of gas shortage, considering they are less dependent on natural gas as a production fuel, implying the direct impact on operations could be modest in the near term. The brokerage said it prefers companies demonstrating stronger execution, including superior volume/pricing momentum, continued investments in distribution, digitisation, and research and development (R&D), and strong brands with pricing power and a premium mix. 

ITC have <10 per cent exposure to gas as a fuel and will see negligible impact due to the 20 per cent supply cut from the government, according to analysts at Nomura. If the gas supply shortage/disruption continues for longer, the brokerage firm believe companies with greater exposure to gas may have to bear rising cost of gas and/or higher cost of alternative fuel if they have to shift to HSD or fuel oil. 

Sustained volatility in crude prices could create pressure on gross margins across the FMCG sector. Crude and its derivatives constitute a significant portion of raw material costs, particularly for Beauty & Personal Care (BPC) companies (30–40 per cent of the raw material basket). In contrast, Food FMCG companies have relatively lower exposure, with crude derivatives accounting for only 10–15 per cent of total raw material costs, according to Choice Institutional Equities. 

In order to offset the cost pressure, FMCG companies might have to take high single-digit to low double-digit price increases. However, this would eventually led to near term volume pressure on the sector (reversing the volume recovery trend of last 1-2 quarters). The impact on food-focused FMCG companies is expected to remain limited, as their key raw material exposure is palm oil, which has remained relatively stable, the brokerage firm said.

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