ITC Shares Plunge as New Excise Duty Sparks Brokerage Downgrades, Target Price Cuts

• ITC shares plummeted after the government imposed a new excise duty on cigarettes, effective February 1, wiping out Rs 72,000 crore from its market cap.
• The new duty, ranging from Rs 2,050–8,500 per 1,000 sticks, will increase overall costs by 22-28% for certain cigarette lengths.
• Multiple brokerages like JPMorgan, Nuvama, Jefferies, and Motilal Oswal downgraded ITC, slashing target prices by up to 34%.
• Analysts anticipate significant price hikes (25-40%) by ITC to offset the duty, potentially impacting sales volumes and encouraging downtrading or illicit cigarette use.
• The move raises concerns about ITC's earnings growth and stock multiples, leading to a bearish outlook from most financial firms.

Why It Matters: New excise duty on cigarettes triggers sharp ITC stock fall, leading to widespread brokerage downgrades.