Shares of ITC fell another 4% on Friday, January 2, extending Thursday’s sharp sell-off after the government announced an excise duty hike on cigarettes. The stock has come under intense pressure as brokerages rushed to reassess earnings assumptions, with at least seven downgrades issued since Thursday morning, accompanied by sharp cuts to price targets.
The continued decline reflects market concerns over margin impact and volume elasticity in ITC’s core cigarette business, which remains the company’s largest profit contributor.
Retail and mutual fund exposure remains high
Unlike many large-cap peers, ITC has no promoter shareholding, making its stock movements more sensitive to institutional and retail flows.
As of the September quarter, ITC had nearly 36 lakh retail shareholders, defined as investors with authorised share capital of up to Rs 2 lakh. These shareholders collectively held an 11.2% stake in the company.
A year earlier, in September 2024, ITC had 34.9 lakh retail shareholders with an 11% stake, indicating a gradual increase in retail participation despite recent volatility.
Mutual funds raised stake over the past year
Mutual funds have steadily increased their exposure to ITC over the last 12 months. Their combined holding rose from 12.8% in September 2024 to 14.3% currently, making them one of the most influential shareholder groups in the company.
Some of the prominent mutual fund shareholders include:
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SBI Mutual Fund: 3.26%
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ICICI Prudential Mutual Fund: 2.28%
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Nippon Life India Mutual Fund: 1.36%
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UTI Mutual Fund: 1.30%
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PPFAS Mutual Fund: 1.17%
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Mirae Asset Mutual Fund: 1.06%
LIC takes a hit as stock corrects
Among insurance companies, Life Insurance Corporation of India remains ITC’s largest public shareholder with a 15.86% stake. The two-day decline in ITC shares has resulted in an estimated Rs 11,000 crore erosion in the value of LIC’s holding, highlighting the scale of institutional exposure to the stock.
Other key public shareholders
Apart from LIC and mutual funds, ITC’s shareholder base includes several large domestic and global investors. Specified Undertaking of the Unit Trust of India (SUUTI) holds a 7.78% stake, while global investor GQG Partners features through its Emerging Markets Equity Fund (2.1%) and International Opportunities Fund (1.65%).
Why ITC is under pressure
The sharp reaction reflects concerns that higher cigarette excise duties could pressure near-term volumes and margins, prompting brokerages to rework earnings models. With a widely held shareholding structure and no promoter support, ITC’s stock remains vulnerable to rapid sentiment shifts when regulatory or policy changes affect its core business.
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