ITC’s share price hit a fresh 52-week low in Monday’s trade as domestic consumer goods companies saw a sell-off driven by MSCI Global Standard Index rebalancing and a deficient monsoon forecast.
Falling for a second straight session, ITC’s stock hit a fresh 52-week low of Rs 278.30 on the NSE and ended Monday’s trade 2.5% lower. The Nifty FMCG index saw a huge sell-off as it ended today’ss trade in the red, down 2.36%, in contrast to the Nifty 50, which slipped 0.70%. All 15 constituents of the FMCG index extended their declines.
“The entire FMCG basket is under pressure due to unfavorable sector-specific cues,” said Ajit Mishra, Senior Vice-President – Research at Religare Broking. The analyst noted that recent earnings have also been less than encouraging, which has weighed on investor sentiment.
Over the past one month, the FMCG index has fallen by 6.08%, in contrast to the benchmark index, which has declined by 2.84%.
Why is ITC extending sharper declines?
While the FMCG sector continues to be under pressure, ITC is extending even sharper declines as the company, which manufactures cigarette brands such as Classic and Gold Flake, continues to bear the brunt of the revised GST structure on tobacco products.
“Q4 margins came under pressure following the recent tax hike, as ITC opted for only a partial pass-through to consumers in order to protect volumes. The cigarette segment continues to be a key contributor to ITC’s profitability,” said Vincent K A, Senior Research Analyst at Geojit Investments.
Effective February 1, 2026, the government replaced the Compensation Cess with a revised tax structure, raising GST from 28% of the transaction value to 40% of the retail sale price, alongside a sharp increase in excise duties.
ITC said the changes significantly affected the comparability of its financials, making gross revenue and excise duty figures for Q4 and FY26 not directly comparable with the corresponding period last year.
Weaker monsoon forecast adds to pressure
Along with the tax changes, expectations of a weaker monsoon have significantly impacted overall sentiment, and investors remain cautious about the company’s near-term earnings outlook, as the company, which manufactures agricultural products, also relies heavily on rural demand.
While ITC’s stock has fallen by nearly 31% over the past six months, the analyst at Geojit noted that the cigarette maker has historically demonstrated strong pricing power in navigating these regulatory challenges.
“The current valuation remains below long-term averages, offering downside support,” Vincent K A added.
Over the past one year, ITC’s share price has declined by over 33%. So far this year, the company’s stock has decreased by 23%.
