ITC slides 15% in two days as cigarette tax overhaul triggers Nuvama downgrade to 'Hold'
New excise regime replaces compensation cess with sharply higher basic excise duty (up to Rs 4,000 per 1,000 sticks), lifting tax incidence 30%+. Nuvama cuts target to Rs 415 from Rs 534 and multiple to 17x from 23x, flagging ~20% price hikes, demand destruction and illegal-market migration. FMCG foods, paperboard and 4% dividend yield cushion the blow.
ITC fell ~15% in two days after cigarette tax overhaul replacing compensation cess with sharply higher excise duty. Nuvama downgraded to 'Hold', warning of 20% price hikes, demand destruction, and illegal-market migration, cushioned by FMCG foods, paperboard, and strong dividends.
Why this matters
ITC had repeatedly hit fresh 52-week highs, including Rs 327.70, even as Future Group retail names slid to new lows. The tax overhaul and Nuvama downgrade sharply reverse that momentum.
Retail-company signals are accelerating, up 728900% QoQ.