The share price of ITC is in focus after the company reported its Q4FY26 earnings. While the company posted strong growth in its Fast-Moving Consumer Goods business (FMCG), brokerages remain divided on the stock due to uncertainty around the recent sharp tax hike on cigarettes.
According to various brokerage reports, the biggest concern now is how the cigarette business performs over the next few quarters after the government increased taxes sharply earlier this year.
While some analysts believe ITC’s diversified portfolio and pricing strategy may help cushion the impact, others remain cautious about earnings and margin pressure in the near term.
Let’s take a look at what major brokerages are saying about the stock after the Q4FY26 results.
Jefferies: Strong quarter, but the real test begins now
The brokerage house Jefferies has maintained a ‘Hold’ rating on ITC and lowered its target price to Rs 350 from Rs 400 earlier. This still implies nearly 14% upside from the current market price.
According to the brokerage report, ITC delivered a strong fourth quarter, mainly supported by its cigarette business and improving Fast-Moving Consumer Goods performance.
Jefferies stated, “ITC reported a strong Q4, driven by cigarette performance.”
However, the brokerage also warned that the March quarter numbers may not fully reflect the actual impact of the tax increase because part of the benefit likely came from inventory stocking before the tax changes took effect.
The brokerage further added, “The real test is in Q1FY27, when the impact of the sharp tax hike will be visible.”
According to Jefferies, the company has so far implemented only partial price hikes despite a steep rise in taxes. This could affect both cigarette volumes and margins in the coming quarters.
The brokerage also highlighted that the Fast-Moving Consumer Goods segment remained a key positive. Revenue growth in the segment accelerated to nearly 15% year-on-year, helped by staples, biscuits, dairy products, snacks and personal care categories.
Nomura: Margin pressure could continue
The brokerage house Nomura has maintained a ‘Reduce’ rating on ITC and lowered its target price to Rs 300 from Rs 318 earlier, implying limited downside from current levels.
According to the brokerage report, cigarette earnings before interest and tax growth appeared better in Q4, but the quarter was not fully comparable because of changes in tax structure and Goods and Services Tax calculations.
Nomura stated, “The company is taking a staggered price hike approach to minimize the volume loss to illicit cigarettes.”
The brokerage believes the cigarette business could remain under pressure in the near term because ITC has not fully passed on the tax hike to consumers yet.
According to the report, taxes on cigarettes effectively increased nearly 40%, while the company’s price hikes remain lower than that level.
Nomura also warned that aggressive price increases may lead consumers towards illegal cigarette markets, which could affect formal industry growth.
The brokerage further stated, “We model a volume/Earnings Before Interest and Tax decline of 5%/15% year-on-year for FY27.”
At the same time, Nomura noted that ITC’s launch of premium cigarette variants may partly help offset some of the margin pressure.
JM Financial: FMCG strength offsets cigarette concerns
The brokerage house JM Financial has maintained an ‘Add’ rating on ITC with a target price of Rs 325, implying around 5.5% upside potential.
According to the brokerage report, ITC’s cigarette business performance during Q4 cannot be directly compared year-on-year because of changes in taxation from February 2026.
JM Financial said, “In the challenging environment, ITC’s strategy is to protect market share and curb illicit trade.”
The brokerage highlighted that the company has implemented staggered price hikes of nearly 20% against a tax increase of around 35–40%.
According to the report, ITC has also introduced premium variants in certain categories to protect profitability and reduce the impact of consumer downtrading.
JM Financial remained positive on the company’s Fast-Moving Consumer Goods business, where sales growth stood at nearly 15% year-on-year.
The brokerage stated, “Fast-Moving Consumer Goods portfolio delivered robust performance.”
Margin expansion in the segment also improved during the quarter despite continued investments in branding and trade promotions.
Motilal Oswal: Near-term earnings may stay volatile
The brokerage house Motilal Oswal has maintained a ‘Neutral’ rating on ITC with a target price of Rs 335.
According to the brokerage report, the cigarette tax pass-through process is still incomplete and this may keep earnings volatile at least until the first quarter of FY27.
Motilal Oswal stated, “The price hike on cigarettes is slower than expected and is expected to impact earnings in FY27.”
The brokerage believes ITC’s diversified cigarette portfolio may help navigate the tax increase better than peers, but competitive pressure from illicit cigarette trade remains a concern.
At the same time, the brokerage also acknowledged the strong performance in the Fast-Moving Consumer Goods segment and improving margins in non-cigarette businesses.
What investors need to watch
Brokerage reports suggest that the next few quarters could be important for ITC, especially for understanding how cigarette volumes and margins respond after the sharp tax increase.
Disclaimer: The brokerage ratings, target prices, and analyst commentary provided in this article represent the independent views of institutional research firms and are for informational purposes only. Shares of ITC involve market risks, and previous performance or brokerage estimates are not indicators of future returns. Readers are strongly advised to consult a SEBI-registered financial advisor before making any buy, sell, or hold investment decisions.
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