Analysts said stronger-than-expected volumes eased fears of a shift to illicit cigarettes and gave ITC greater scope for additional price hikes.
| Photo Credit:
Dado Ruvic
Shares of ITC rose on Monday to their highest levels in more than a monthafter brokerages said higher cigarette volumes suggested the worst impact of a recent tax hike may be over, with phased price hikes likely to boost profitability in the coming quarters.Shares rose as much as 4.11 per cent to ₹292.55, their highest point since June 23.ITC, known for consumer goods products and cigarette brands such as Gold Flake and Classic, reported a 27 per cent slump in quarterly profit on Friday to ₹3,579 crore ($375.24 million).Analysts said stronger-than-expected volumes eased fears of a shift to illicit cigarettes and gave ITC greater scope for additional price hikes.The performance also indicated ITC’s staggered pricing strategy was helping protect market share despite the near-term hit to margins, brokerages said.Cigarettes account for the bulk of ITC’s earnings, making the segment’s recovery a key focus for investors.PhillipCapital said the June quarter likely marked the trough for cigarette earnings, while HSBC said recovery would be gradual as the impact of price hikes flowed through.Jefferies and Nomura said resilient cigarette volumes following the tax increase suggested consumer demand had held up better than expected, giving ITC room to implement additional price hikes and improve profitability over the coming quarters.Fiscal 2027 would remain a transition year as ITC balances price hikes with protecting market share, brokerage Dolat Capital said, adding that it expects the company to restore profitability in its cigarette business by the end of the fiscal year.The world’s most populous country earlier this year imposed an excise duty on cigarettes between ₹2,050 and ₹8,500 per thousand sticks, in addition to a 40 per cent consumption tax: a move analysts called “a negative surprise for the industry”.Published on August 3, 2026
