ITC shares fall to 34-month low after cigarette excise duty hike, block deal

Shares of ITC Ltd

. fell to the lowest level in nearly three years on Thursday, January 1, after the government notified the hike in excise duty on cigarettes and other products, along with a block deal that took place in the stock. The stock fell nearly 9% on Thursday.

The Finance Ministry notified the imposition of 40% GST on Tobacco, Cigarettes and Bidis effective from February 1, 2026. This includes a 28% tax, along with the subsuming of Excise and NCCD.

What needs to be known is whether there has been an imposition of additional cess or duty and what will be the total tax incidence after implementation.

A large trade also took place in ITC earlier in the day where over 4 crore shares changed hands in the transaction. The number of shares that changed hands amounted to 0.3% of the company's outstanding equity.

Shares changed hands at an average price of ₹400 per share, taking the total transaction value to ₹1,614.5 crore.

For the September quarter, ITC's cigarette business contributed to 48% of its overall topline. Revenue for the cigarette business grew by 6.7% from the same quarter last year to ₹8,722 crore, while its volumes grew 6%, in-line with the CNBC-TV18 poll estimate, which had pegged the growth between 5% to 6%.

Shares of ITC are trading 10% lower on Thursday at ₹362.7. The stock had declined 12% in 2025, marking its first year of negative returns after 2020. These are levels that the stock had last seen in March 2023. This is the biggest single-day drop that ITC has seen since March 2020.

ITC shares have also declined on very heavy volumes on Thursday. As many as 13.2 crore shares have already been traded as of 12 noon today, which is significantly higher compared to their 20-day average of 30 lakh.