ITC shares down by more than 8% after additional excise duty imposed on cigarettes

ITC shares are sharply down today. At 11: 40 a.m. 1^st January, 2026, ITC’s share price is down by 8.59% trading at Rs 368.40. Nifty 50 index is up by 0.11% at this time.

Government imposes additional duty on cigarettes

ITC shares are down today after the government notified yesterday that additional excise duty will be imposed on cigarettes. This additional duty will be in the range of 22% – 28%, depending on the length of the cigarette. This duty will be imposed over the 40% GST that is there on cigarettes. Cigarette prices may increase between Rs 2-3 per stick after the imposition of this additional duty. The duty will come into effect on February 1^st.

Cigarette business contributed around 48% to the total revenue of ITC in the September quarter. ITC has diversified away from the cigarette business in the past few years. It still is significantly dependent on the cigarette business for its revenues and profitability.

The new duty may adversely impact the revenues of ITC. The extent of the impact will depend on the price elasticity of demand for cigarettes. Cigarettes have shown relatively inelastic demand in the past. But the price elasticity may increase with such a significant increase in price. Price elasticity of demand is the percentage decline in quantity demanded for a 1% increase in price.

ITC shares have lost around 24% in the past 1 year

In the past 1 year, ITC shares have lost 24.48%. Some of this decline also happened because of the demerger of the hotel business of the company into a separate listed entity in February last year. ITC shares are currently trading at a 12-month trailing Price-to-earnings (P/E) ratio of around 13.

52-week high price of the stock currently is Rs 491. 52-week low price of the stock is Rs 365.10.

 Disclaimer : This content is only for informational purpose. It does not make any recommendation to act or invest.

 Source: NSE, ITC