The share price of Indian conglomerate ITC Ltd. has faced significant headwinds in the current year, underperforming the broader market. A combination of factors, including the strategic stake sale by its largest shareholder British American Tobacco (BAT), a hefty 40% Goods and Services Tax (GST) slab on cigarettes, sector-wide corrections in the fast-moving consumer goods (FMCG) space, and investor caution surrounding the demerger of ITC Hotels have collectively weighed on the stock.
Performance Snapshot and the Investor's Dilemma
Year-to-date, ITC shares have declined by almost 12%, starkly contrasting with the 8% gain posted by the benchmark Sensex. This short-term pressure, however, sits against a varied longer-term performance. Over a two-year period, the stock is down 6%, but zooming out to a five-year horizon reveals a robust return of 105% for investors.
With market sentiment clouded by global uncertainties, a pressing question emerges for market participants: Is the current dip in ITC's price a window of opportunity to accumulate a quality value stock, or is further pain ahead? We delve into perspectives from both fundamental and technical analysts to chart the possible path forward.
Fundamental Perspective: A Long-Term Compounder
Seema Srivastava, Senior Research Analyst at SMC Global Securities, underscores the resilience of ITC's diversified business model. She points out that the cigarettes division continues to be a cash flow engine, bolstered by a shift towards premium products, stable demand, and a period of relative tax calm, which helps mitigate cost inflation.
While the paperboards and packaging segment faces challenges from imports and rising costs, Srivastava notes that government policies like minimum import prices and anti-dumping duties are improving its medium-term prospects. She is optimistic about the potential impact of the upcoming Union Budget for 2026, expecting measures like income tax relief, consumption push, and front-loaded government spending to boost demand.
"Strong balance sheet, sustainability leadership, diversified earnings and steady cash generation make ITC well-positioned for long-term investors seeking stability with gradual growth," Srivastava concluded.
Echoing a positive stance, Divya Agrawal, Research Analyst at Motilal Oswal Financial Services, has issued a 'buy' recommendation with a target price of ₹515. Agrawal cites ITC's stable core cigarette business, driven by steady volumes and premiumisation, as a key strength. Although margins have been pressured by high raw material costs, she anticipates an easing that will support future profitability.
"Overall, ITC offers steady cash flows, improving growth visibility and limited downside risk. As consumption demand recovers and margins improve, the stock offers long-term compounding potential for patient investors," Agrawal stated.
Technical Outlook: Defining the Range and Key Levels
On the charts, Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi, observes that ITC is likely to trade within a defined range in the near term, indicating consolidation. He identifies ₹398 as a solid support level that has attracted buying interest, while ₹412 acts as immediate resistance. A sustained break above ₹412 could propel the stock towards ₹418.
Patel emphasizes that ₹425 remains a major resistance zone. A convincing close above this level would signal a stronger trend reversal and could open the door for a rally towards ₹495. The bullish setup would be invalidated if the stock closes below ₹390 on a daily basis.
Taking a longer-term view, Pravesh Gour, Senior Technical Analyst at Swastika Investmart, affirms that the stock's primary uptrend structure remains intact despite recent consolidation. The previous resistance band of ₹360–370 has now transformed into a major support base on monthly charts.
Gour highlights that recent price action shows signs of selling pressure drying up. He identifies ₹440–460 as the immediate resistance area, followed by the all-time high zone of ₹490–500. A decisive monthly close above ₹500 could trigger a fresh bullish momentum phase targeting ₹600+ levels over the medium to long term.
"As long as ITC holds above ₹370 on a monthly closing basis, the broader bullish trend remains intact," Gour said. However, a sustained breakdown below this crucial support could weaken the structure and expose the stock to a fall towards the ₹300 mark.
The consensus among experts suggests that while short-term pressures are evident, ITC's fundamental strengths as a diversified cash-generator provide a cushion. For investors with a long-term horizon and patience, the current valuation may present an accumulation opportunity, contingent on the stock holding key technical support levels.
