Over the years, ITC shares have consistently performed well on Budget day, typically closing higher as the market reacts to policy announcements. However, as the 2025 Union Budget approaches, investors are cautiously watching for potential tax changes that could impact ITC’s key revenue driver—cigarettes.

Historically, ITC’s stock has gained on nine out of the last ten Budget days, with an average increase of 1.86% since 2017. The exception was 2020 when a surprise hike in the National Calamity Contingent Duty (NCCD) on cigarettes led to a sharp 6.97% drop in the stock. Analysts believe this year’s Budget may introduce a minor excise duty increase, but a steep hike seems unlikely given last year’s adjustments.

Nuvama Institutional Equities expects ITC’s cigarette segment to sustain moderate growth despite regulatory pressures. They forecast a 3.5% year-on-year increase in cigarette volume for Q3FY25, up from 3.3% in the previous quarter. However, higher raw material costs could slightly impact margins.

A significant tax increase could potentially shift demand toward illicit products, a concern frequently raised by the industry. Meanwhile, discussions around raising the GST on cigarettes from 28% to 35% have added another layer of uncertainty.

With ITC shares already down 10% year-to-date, the upcoming Budget could be a pivotal moment for the stock. Will ITC continue its winning streak, or will taxation changes disrupt the momentum? Investors are eagerly awaiting the Finance Minister’s announcement.