ITC Limited has announced the allotment of 2,69,610 ordinary shares under its Employee Stock Option Schemes on January 16, 2026. The allotment follows the exercise of stock options by eligible employees and represents the company's ongoing commitment to employee participation in its growth.

Share Allotment Details

The company issued and allotted 2,69,610 ordinary shares of ₹1.00 each following the exercise of 26,961 options by optionees under the Employee Stock Option Schemes. The allotment was completed on January 16, 2026, with the committee meeting concluding at 3:40 PM.

Impact on Share Capital

Following this allotment, ITC Limited's issued and subscribed share capital has increased significantly. The company's total share capital now stands at ₹1,252.92 crores, representing a substantial equity base.

Regulatory Compliance

The share allotment was conducted in accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. ITC Limited has duly informed the stock exchanges about this corporate action to ensure transparency and compliance with regulatory requirements.

The communication was sent to both the National Stock Exchange of India Limited and BSE Limited, maintaining the company's commitment to proper disclosure practices. The allotment demonstrates ITC's structured approach to employee stock option schemes as part of its human resource management strategy.

ITC shares continued their downward spiral, falling 1% to ₹334.85 on Tuesday, January 13, marking a fresh 52-week low. The FMCG giant has been under intense selling pressure since the government announced significant tax hikes on cigarettes, which will take effect from February 1, 2026.

Government Announces Major Tax Overhaul

In December 2025, the Indian government unveiled a comprehensive revision to tobacco taxation through amendments to the Central Excise Act. The new framework introduces substantial excise duties on cigarettes, creating additional financial burden for manufacturers.

The government also implemented the Health and National Security Cess Act, imposing a cess on pan masala manufacturing capacity. However, the overall tax burden on pan masala remains unchanged at 88%, including the 40% GST. This revised structure replaces the previous regime of 28% GST plus compensation cess on tobacco products.

Brokerage Downgrades Reflect Industry Concerns

The magnitude of the tax hike has prompted widespread downgrades from leading brokerages, with analysts expressing concerns about volume pressure and earnings impact.

Nuvama Cuts Rating to Hold

Nuvama downgraded ITC from "buy" to "hold" and revised its price target to ₹415-₹534 per share. The brokerage noted that while a sharp tax hike was expected, the actual magnitude appears higher than anticipated, likely prompting consensus downgrades to cigarette volume and EBITDA estimates.

Motilal Oswal Turns Neutral

Motilal Oswal downgraded the stock from "buy" to "neutral" with a reduced target price of ₹400. The firm highlighted that stable tax regimes over the past five years helped curtail illicit cigarette markets, enabling ITC's cigarette volumes to grow at a 5% CAGR. The new tax structure could potentially shift volumes from legal to illicit brands and trigger downtrading within legal brands.

Axis Securities Adopts Cautious Stance

Axis Securities revised its rating to "Hold" with a target price of ₹380. Despite cutting margin estimates for FY26/FY27 due to near-term headwinds, the firm maintains a positive outlook on medium to long-term growth prospects.

Stock Performance Under Pressure

ITC's share price performance reflects the market's concerns about the regulatory changes and their potential impact on the company's core cigarette business.

The stock's decline represents a significant erosion in market value, with investors clearly factoring in the potential negative impact of the new tax regime on ITC's cigarette business, which remains a key revenue and profit contributor for the company.

Market Outlook

Analysts expect the earnings pressure on cigarettes to overshadow near-term catalysts such as soft tobacco prices and recovery in FMCG and paper segments. The new tax framework creates uncertainty around volume sustainability and margin protection, leading to a more cautious investment approach among institutional investors and analysts.