ITC Stock Slumps 3% on 2.9% Equity Block Deal

ITC Shares Under Pressure Following Significant Equity Block Deal

The recent block deal involving ITC Ltd has raised concerns among investors, leading to a notable decline in the stock’s value.

Market Reaction to the Block Deal

ITC shares opened at ₹264 on the National Stock Exchange (NSE) and dipped to a low of ₹257.20 during the trading day. The stock was the most actively traded on the exchange, with over 22 million shares changing hands, resulting in trades worth approximately ₹576.87 crore. As of 10:35 AM, ITC shares were trading near the day’s low, reflecting a 3% decline at ₹257.45.

The recent performance of ITC shares has been lackluster, underperforming the broader market indices. Data from the NSE indicates that ITC has corrected by 29% in 2026 and 36% over the past year, in contrast to declines of 14.1% and 10.4%, respectively, in the Nifty 50 index. Over the past three years, ITC’s stock has plummeted by 42%, while the benchmark index has seen a modest gain of over 14%.

Analysts Weigh In on ITC’s Future

Vinit Bolinjkar, head of research at Ventura, noted that the pressure on ITC’s stock is largely due to a significant increase in tobacco taxation earlier this year. However, he believes that the current valuation presents a favorable risk-reward scenario. Bolinjkar emphasized the importance of monitoring ITC’s ability to maintain cigarette volumes while gradually improving margins without triggering substantial downtrading.

He also highlighted the encouraging performance of ITC’s non-cigarette segments, particularly the FMCG-Others category, which continues to show double-digit growth. The Paperboards & Packaging division is also witnessing a significant improvement in profitability. Bolinjkar remains optimistic about ITC’s long-term diversification strategy and suggests that investors consider accumulating shares at the current price level.

Citi’s Upgraded Outlook

In a recent report, global brokerage Citi upgraded its rating for ITC from ‘Sell’ to ‘Buy’ and raised the target price to ₹300. The brokerage believes that the cycle of earnings downgrades for ITC is nearing its end, and the current valuations present an improved risk-reward scenario. Citi anticipates a 23% decline in ITC’s cigarette EBIT for FY27, primarily due to competition from both branded and illicit products. However, they expect a recovery in FY28 as pricing actions take effect and profitability stabilizes.

Citi also noted that ITC has implemented various mitigating strategies since the tax hike in February, including calibrated price increases and portfolio adjustments across key segments. Estimates suggest that approximately 75% of the tax increase has been absorbed through price hikes, and new product launches are expected to help retain consumers amidst potential downtrading.

Key Highlights

• ITC shares fell over 3% following a large equity block deal involving 2.93% of the company’s equity.
• The stock has underperformed the Nifty 50 index significantly over the past year and three years.
• Analysts suggest the current valuation may present a buying opportunity for long-term investors.
• Citi upgraded ITC’s rating to ‘Buy’ and raised the target price to ₹300.
• ITC’s non-cigarette businesses are showing promising growth, particularly in FMCG and packaging.

Investor Note: Investors should consider the current weakness in ITC shares as a potential buying opportunity, particularly given the positive outlook for its non-cigarette segments and the potential for recovery in cigarette margins. Monitoring key performance indicators will be essential for assessing the stock’s future trajectory.