NS) has been one of the biggest drags on the Nifty IT index this quarter, with its share price down about 37% over the last three years. The decline comes at a time when the broader market, led by the Sensex and Nifty, has been riding on strong earnings from the banking and consumer sectors. Retail investors who hold ITC for its dividend yield have watched the stock lose ground to faster‑growing peers, prompting many to cut exposure. The conglomerate’s management has been betting heavily on its non‑tobacco businesses – packaged foods, hotels, paper and agribusiness – which together now contribute over half of total revenue.
Kotak Mahindra’s research team projects that these segments could turn profitable by the fiscal year 2025‑26, driven by higher margins in FMCG and a rebound in hotel occupancy. If the outlook materialises, ITC could see an earnings uplift that narrows the gap with its peers. Nevertheless, investors remain cautious. The tobacco arm still accounts for roughly 30% of cash flow, and any regulatory clamp‑down or higher excise duties could dent profitability.
Moreover, the stock trades at a price‑to‑earnings multiple well below the sector average, reflecting market scepticism about the speed of the transition. For the average Indian saver, the risk‑reward balance hinges on whether the non‑tobacco earnings growth can offset the lingering dependence on cigarettes. Until the company delivers consistent profit from its new businesses, most analysts advise treating ITC as a speculative holding rather than a core portfolio component. Retail investors should monitor quarterly results, watch for policy changes affecting tobacco, and consider diversifying into broader consumer or FMCG stocks if they seek exposure to the same growth story with lower volatility.