ITC Shares Plunge 10% on New Tax Hike; Brokerages Downgrade, Cut Target Price

• ITC shares fell nearly 10% after the central government imposed heavy taxes on cigarettes from February 1.
• Brokerage firms Nuvama, Prabhudas Lilladher, and DAM Capital downgraded ITC's rating and reduced target prices.
• Nuvama downgraded ITC from 'Buy' to 'Hold', cutting its target price to ₹415 from a previous higher valuation.
• The new tax structure, replacing Compensation Cess with higher Basic Excise Duty, could lead to over 30% total tax increase.
• Experts predict a 3-9% decline in cigarette sales volume due to an expected price hike of over 20%.

Why It Matters: Heavy cigarette tax hike causes ITC shares to plummet, leading to brokerage downgrades and reduced target prices.