ITC Share Price Fall Triggers Rs. 13,740 Crore Notional Loss for Major PSU Insurers; What Investors Must Know

Many investors, including state-run insurance companies, suffered heavy losses as ITC shares plunged by 5 per cent to touch a 52-week low of Rs. 345.25 on Friday after the government announced a sharp increase in excise duty on cigarettes.

Although the ITC stock recovered slightly, it still closed the day 4 per cent lower at Rs. 350.10, as the government's decision to increase excise duty on tobacco directly affected the company, being the largest producer and distributor of cigarettes in the country. Over the last five trading days, the stock has lost more than 13 per cent, and over the past six months, it has declined by over 15 per cent.

Leading State-run Insurers Suffer

The sudden decline in ITC's share price led to large notional losses for three major government-owned insurance companies.

Life Insurance Corporation of India (LIC), which owns 15.86 per cent of ITC, witnessed the value of its stake falling from Rs. 80,028 crore on December 31 to Rs. 68,560 crore on January 2. This amounts to a notional loss of Rs. 11,468 crore. General Insurance Corporation of India (GIC), with a 1.73 per cent stake, lost Rs. 1,254 crore, while New India Assurance Company, holding 1.4 per cent, saw a decline of Rs. 1,018 crore. Together, these three insurers lost Rs. 13,740 crore in just two days.

The selloff also wiped out Rs. 72,000 crore from ITC's total market value, which now stands at Rs. 438,639 crore. The company's price-to-earnings (P/E) ratio currently stands at 22.59.

Brokerages' View On ITC Share Price

Following the tax announcement, several broking firms have revised their outlook on ITC. Centrum Broking downgraded the stock from Buy to Neutral with a revised target price of Rs. 390 for the share, citing a possible earnings drop of 10-13% in FY27-28E.

Global brokerage, Jefferies has also downgraded ITC to Hold with a revised target price of Rs. 390, down from Rs. 480, citing concerns over cigarette volume growth and margin pressure.

LIC's outlook remains steady

Despite the hit to its ITC holdings, LIC's own stock remained resilient. On January 2, LIC shares closed nearly 1 per cent higher at Rs. 861. According to Trendlyne, 13 research reports set an average share price target of Rs. 1125.20 for the stock with a potential upside of nearly 30% from the current trading price.

GIC Stock Analysis

General Insurance Corporation of India (GIC) saw a slight increase in its share price on January 2, closing at Rs.379.55-up just 0.45 per cent for the day. The stock has been trading within a 52-week range of Rs. 351 to Rs. 475.95, showing relative stability despite broader market volatility and the recent selloff in ITC, where GIC holds a stake.

Broking platform TradingView has projected a long-term price target of Rs. 475 for GIC in 2026, based on technical analysis. However, analysts have maintained a mixed to neutral stance on the stock, with no strong buy or sell calls issued in the past three months.

NIACL Outlook

The New India Assurance Company Limited (NIACL) shares rose nearly 1 per cent on January 2 to close at Rs.157.04, despite the notional losses it faced from its exposure to ITC. According to Trendlyne, the stock has a target price consensus of Rs.213, which is a 35.84% rise from the current price.

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