ITC Stock Rebounds Strongly After Tax Concerns Ease
ITC Ltd. shares surged nearly 4% on August 3, 2026, bringing relief to investors after recent concerns over higher cigarette taxes. The stock rallied following a positive report from global brokerage Nomura, which upgraded its rating on ITC and raised its target price, signaling renewed confidence in the company’s long-term growth prospects.
During trading on the National Stock Exchange (NSE), ITC shares climbed 3.81% to an intraday high of ₹292.55, compared with the previous closing price of ₹281. The stock opened at ₹284.45 before gaining momentum throughout the session.
Cigarette Business Recovering Faster Than Expected
The government’s recent increase in cigarette taxes had raised concerns that ITC’s core tobacco business would face a significant slowdown. However, the company’s first-quarter FY2027 results indicate that the impact has been much smaller than analysts had anticipated.
Market experts had expected cigarette sales volumes to decline by more than 10%, but the actual drop was limited to just 5–6%.
Although the cigarette segment’s EBIT fell 35% year-on-year due to higher tax costs, analysts believe ITC’s gradual pricing strategy is helping stabilize demand and improve business performance.
Nomura Upgrades ITC to ‘Buy’
Global brokerage firm Nomura believes the worst phase for ITC is now over.
The brokerage upgraded the stock from “Reduce” to “Buy” and increased its target price from ₹300 to ₹340, reflecting confidence in the company’s recovery and future earnings potential.
Other brokerages have maintained a more cautious outlook:
- Motilal Oswal retained its “Neutral” rating with a target price of ₹300, stating that the impact of higher taxes may take a few more quarters to normalize.
- JM Financial maintained its “Add” rating but lowered its target price to ₹325, citing earnings pressure while highlighting ITC’s attractive 5% dividend yield, which could support the stock during market volatility.
Q1 FY2027 Financial Performance
For the June quarter (Q1 FY2027), ITC reported:
- Revenue: ₹16,908 crore
- EBITDA: ₹4,514 crore
- EBITDA Margin: 26.7%
- Net Profit: ₹3,579 crore
While revenue and profit came in slightly below market expectations, several business segments continued to perform well.
FMCG Business Remains a Bright Spot
ITC’s non-cigarette businesses continued to show encouraging growth.
Key highlights include:
- FMCG business recorded 12% revenue growth, driven by strong demand for daily consumer products.
- Paperboards business posted 9% revenue growth, reflecting steady industrial demand.
- Agribusiness revenue declined 17%, mainly due to supply chain disruptions caused by geopolitical tensions in the Middle East.
The company also noted that demand for discretionary FMCG products, including notebooks, has started improving, indicating stronger consumer spending.
Should Investors Buy ITC Shares?
According to the company’s management, ITC is taking strategic measures to protect its market share in the cigarette business while continuing to expand its FMCG portfolio.
Market sentiment also remains largely positive.
Among the 37 analysts tracking ITC:
- 17 recommend “Buy”
- 15 recommend “Hold”
- 5 recommend “Sell”
The combination of a recovering cigarette business, improving FMCG performance, attractive dividend yield, and positive brokerage outlook continues to make ITC an important stock to watch.
However, investors should also consider factors such as future tax policy, earnings growth, and overall market conditions before making any investment decisions.
