LIC’s losses widen to Rs 10,445 crore in ITC in two days as shares plunge 13% after tax hike

India’s largest institutional investor Life Insurance of India (LIC) has lost Rs 10,445 crore in just two days on its investment in blue-chip stock ITC, which plunged 14% after the government announced a revised excise duty structure on cigarettes.LIC’s stake in ITC stood at 15.86% (199 crore shares) at the end of the September quarter.

The Finance Ministry late on Wednesday announced a revised excise duty structure ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks depending on the length of the cigarettes. This measure sent shock waves through the cigarette industry and led to a sell-off in tobacco stocks.ITC shares fell to a three-year low of Rs 345.35 on Friday before closing the session at Rs 350.10, down Rs 13.75 or 3.8% from Thursday’s closing price.

Read more: ITC and Godfrey Phillips shares fall up to 5% amid steep cigarette tax hikes

Following this move, the stock has undergone a downgrade from several top brokers.

Motilal Oswal Financial Services called the magnitude of the tax increase staggering. Cigarette taxes will increase by around 50%, forcing ITC to implement price hikes of at least 25% at the portfolio level just to maintain the current net revenue per stick, the report said. The broker has downgraded ITC from ‘Buy’ to ‘Neutral’ with a revised target price of Rs 400. “To offset the tax burden, ITC will have to implement substantial price increases. Assuming no change in the mix, ITC will need a 40% price increase to pass on the impact,” Jefferies warned in its downgrade from Buy to Hold. The company noted that if ITC passes on the full impact through price hikes, the effective tax increase will be around 70%, increasing unit tobacco excise duty from 55% to 65% of the MRP.

Read more: ITC shares fall to three-year low after tax bomb: Is this a falling knife or hidden value?

Jefferies remained cautious, stating that “the medium-term upside potential now appears capped” and warning that the stock could face more pressure in the near term.

While ITC’s concerns don’t stem from the recent government actions, 2025 was a complete extinction year for the tobacco-to-agri conglomerate. The stock price has fallen 28% in a one-year period.

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