ITC Extends Losses on Excise Hike; 36 Lakh Retail Shareholders Hold 11.2% Stake
ITC continues its decline for the second consecutive day amid excise duty hikes on cigarettes, with shares down 3.40% to ₹351.40. The company's extensive shareholder base includes 36 lakh retail investors holding 11.20% stake, while institutional holdings show LIC as the largest public shareholder at 15.86% and mutual funds increasing their stake to 14.30% over the past year.
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Cigarette stocks continue trading under severe pressure as ITC shares extend their decline for a second consecutive day following the government's steep excise duty hike. ITC shares are down 3.40% to ₹351.40, building on Thursday's 4.38% plunge to ₹347.90, while Godfrey Phillips India and VST Industries remain under pressure as the market digests the impact of significantly higher cigarette costs.
Sector-Wide Selloff Intensifies
The Finance Ministry's announcement of excise duty hikes ranging from ₹2,050 to ₹8,500 per thousand sticks has triggered widespread selling across tobacco stocks. The new levy combines with existing GST to create a substantial tax burden on cigarettes, replacing the compensation cess currently imposed on tobacco products.
| Stock: | Current Price (₹) | Daily Change (%) | Trading Impact |
|---|---|---|---|
| ITC: | 351.40 | -3.40% | Extended decline |
| Godfrey Phillips: | 2,239.70 | -2.22% | 8-month low hit |
| VST Industries: | 249.50 | -2.35% | Continued pressure |
The selloff has been amplified by at least seven brokerage downgrades issued since morning, with sharp cuts to price targets reflecting concerns about the operational impact on cigarette manufacturers.
Massive Retail Investor Base Affected
ITC's extensive shareholder base is feeling the impact of the two-day decline. The company has nearly 36 lakh retail shareholders holding up to ₹2 lakh in authorized share capital, collectively owning an 11.20% stake in the company. This represents an increase from 34.90 lakh retail shareholders with 11% stake in the previous year.
| Shareholder Category: | Stake (%) | Key Details |
|---|---|---|
| Retail Shareholders: | 11.20% | 36 lakh investors |
| Mutual Funds: | 14.30% | Increased from 12.80% |
| LIC: | 15.86% | Largest public shareholder |
| SUUTI: | 7.78% | Government holding |
Institutional Holdings and Market Impact
Mutual funds have increased their stake in ITC over the past 12 months, rising from 12.80% to 14.30%. Major mutual fund stakeholders include SBI MF with 3.26%, ICICI Prudential MF at 2.28%, and Nippon Life India MF holding 1.36%.
| Fund/Institution: | Stake (%) |
|---|---|
| SBI MF: | 3.26% |
| ICICI Prudential MF: | 2.28% |
| Nippon Life India MF: | 1.36% |
| UTI MF: | 1.30% |
| PPFAS MF: | 1.17% |
| Mirae Asset MF: | 1.06% |
The Life Insurance Corporation of India, as the largest public shareholder with a 15.86% stake, has seen the value of its ITC holdings drop by ₹11,000 crore during this two-day decline.
Tax Structure Creates Pricing Challenges
The new excise duty structure varies significantly across cigarette categories, with longer and premium variants facing the steepest increases. For ITC, where the cigarette division contributes 45% of total revenue, the tax hike represents a significant operational challenge requiring substantial price adjustments.
| Cigarette Category: | Excise Duty (₹ per 1,000 sticks) | Expected Price Impact |
|---|---|---|
| Unfiltered (shorter than 65 mm): | 2,050 | Lower impact |
| Filtered (70-75 mm): | 5,400 | 22-28% price increase |
| Longer and premium variants: | Up to 8,500 | ₹2-3 per stick hike |
Analysts warn of significant volume and earnings impact, with projections that ITC might need to implement price increases of at least 15% to offset the tax burden. The company's diverse shareholder base, from retail investors to large institutions, continues to monitor the stock's recovery attempts as it trades near multi-year lows.
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