Share prices of ITC Ltd. and Godfrey Phillips India, the country's chief cigarette manufacturers, declined significantly on January 1. It is being said that this phenomenon was triggered by the rise in excise duty on cigarettes, which will come into effect from February 1. The downward curve created by the selling spree wiped out approximately Rs. 60,000 crore in combined market capitalisation. ITC remains the largest player in the category, and while analysts have warned that volumes might come under some pressure in the short-term, long-term gains will remain intact, Moneycontrol reported.
These short-term disruptions in volume will continue for all the companies in the segment. ITC holds nearly 75% of the market share and will remain a key focal point.
ITC remains biggest segment player
In the second quarter of FY26, ITC posted consolidated revenue of about Rs. 21,256 crore. Cigarettes continued to be the company's biggest business. Revenue from the FMCG-Cigarettes segment stood at nearly Rs. 9,414 crore, up around 6-7 per cent from last year, helped by steady demand and higher sales of premium products, Moneycontrol reported.
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The FMCG-Others segment (excluding cigarettes) also saw growth, bringing in around Rs. 6,059 crore. This was supported by good performance in packaged foods, personal care, staples, and other consumer products.
Institutional investors trusting ITC
ITC has remained a favourite for Institutional investors, who continue to hold substantial stakes in the sector. Mutual funds held 14.3 per cent of ITC, 3.62 per cent of Godfrey Phillips, and 4.64 per cent of VST Industries, as per data from September 2025.
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Mutual funds, too, have held huge quantities of the company's shares. ICICI Prudential Value Fund held more than 22 million shares, UTI Nifty 50 Index Fund had close to 21 million, and ICICI Prudential FMCG Fund had about 15 million shares. In November 2025, as many as 214 funds raised their stake in ITC, while 68 reduced their holdings. This is a clear manifestation of continued confidence in the company's long-term outlook, even though concerns surrounding near-term volumes rise.
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