| Date | Stock | Entry Price | Position |
|---|---|---|---|
| 07 May 2026 | ITC | ₹307.55 | Lot 1 |
Why Now
ITC hit a 52 week high of ₹444 and has since fallen to ₹307 — roughly 30% off the high. Dividend yield at current price sits at 4.5%. Nothing fundamental has changed in the business.
The market appears to be reacting aggressively to the cigarette tax hike. Historically ITC has managed to pass on a significant portion of tax increases to consumers, though long-term volume pressure remains a risk.
That gap between market reaction and business reality is the entry point.
The Range
| Level | Price |
|---|---|
| 52-week high | ₹444 |
| 52-week low | ₹274 |
| Entry — Lot 1 | ₹307.55 |
| Entry — Lot 2 | ₹290.60 |
| Entry — Lot 3 | ₹262.35 |
| Down from high | ~41% |
| Average cost | ₹284.51 |
The Business
ITC often trades like a mature dividend-oriented business — range-bound, cash generating and sentiment driven. Revenue is dominated by cigarettes. FMCG, hotels and agri are good businesses but tobacco is the engine.
The range since August 2024 has been ₹240 to ₹444 — multiple cycles. This setup has appeared 2-3 times a year consistently. That’s exactly what this system targets.
The Risk
Cigarette tax policy is the primary risk — but it cuts both ways. Negative policy creates opportunity to enter. Positive policy creates opportunity to exit. Monitor closely.
Structural risk — any significant regulatory move against tobacco beyond annual tax hikes. This would require thesis reassessment.
This thesis breaks if cigarette volume growth turns negative for two consecutive quarters or if structural tax increases permanently compress margins and growth.
What I’m Watching
- Cigarette volume trends — the single most important data point
- Illicit trade share — any acceleration would signal volume loss is structural
- ITC’s pricing strategy — full pass-through vs calibrated hikes
- Q2 FY27 results — second consecutive quarter of volume data under new tax regime
- Any FMCG segment acceleration that changes the revenue mix
Current Status
Three lots active. Lot 1 at ₹307.55, Lot 2 at ₹290.60, Lot 3 at ₹262.35. Average cost ₹284.51.
Q4 FY26 results confirmed the business was intact — cigarette revenue +29.5% YoY, pricing power demonstrated post the earlier hike.
GST 2.0 changed the picture materially. Cigarette taxes up 60–65% in a single reset — not the usual annual increment. ITC responded with phased price hikes rather than full pass-through, trying to protect volume share against illicit alternatives.
Q1 FY27 results — consolidated revenue +27.6% YoY to ₹29,523 crore. Consolidated profit fell 16.2% to ₹4,394 crore. Cigarette segment pre-tax profit ₹3,769 crore — down 31.5% YoY. This was the first full quarter under the new tax regime. ITC made 30+ portfolio interventions and implemented staggered price hikes to protect the legal franchise and curb downtrading to illicit products. Volume data not explicitly disclosed — analyst estimates ~10% YoY decline going in.
Lot 3 added on 01 Sep 2026 at ₹262.35 — while the thesis remains under active review. The stock is down 41% from its high. GST 2.0 compressed cigarette margins and the market is pricing in structural volume decline. The business remains cash generative with a predictable trading range — added at a level where the risk-reward looks reasonable given the dividend floor. This was a range-based decision made despite the review, not because the review was resolved. Q2 FY27 results in October remain the decisive test.
The invalidation condition being tested: cigarette volume growth turning negative for two consecutive quarters. Q1 FY27 is Quarter 1 of this test. Q2 FY27 results (October 2026) is the decisive data point. If volumes decline again in Q2, the two-consecutive-quarters condition is triggered and a serious exit conversation begins.
Thesis status: Under active review. Watching Q2 FY27.
This entry will be updated when something material changes — results, averaging, exit or thesis break. Not before.
Journal Timeline
| Date | Event | Status |
|---|---|---|
| 07 May 2026 | Initial entry — Lot 1 at ₹307.55 | Active |
| 21 May 2026 | Q4 FY26 results — ₹8 final dividend declared (record date May 27). Profit decline is base effect from FY25 hotels demerger windfall. Cigarette business intact. Thesis holds. | Reviewed |
| 29 May 2026 | Lot 2 entered at ₹290.60. Price reached averaging zone ₹287-290. Thesis intact. | Active |
| 06 Jun 2026 | GST 2.0 thesis review — cigarette taxes up 60–65%, stock at ₹280, fresh 52W low ₹274. Thesis under active review. Watching. | Under Review |
| 31 Jul 2026 | Q1 FY27 results — first full quarter under GST 2.0. Consolidated revenue +27.6% YoY. Profit -16.2% to ₹4,394 crore. Cigarette segment profit -31.5% YoY to ₹3,769 crore. 30+ portfolio interventions, staggered price hikes. Volume data not disclosed — analyst estimates ~10% YoY decline. Quarter 1 of the two-consecutive-quarters invalidation test. Q2 FY27 is the decisive data point. | Under Review |
| 01 Sep 2026 | Lot 3 added at ₹262.35 — while thesis remains under active review. Stock down 41% from high. GST 2.0 compressed cigarette margins and market is pricing in structural volume decline. Business remains cash generative with predictable trading range — added at a level where risk-reward looks reasonable given the dividend floor. Range-based decision made despite the review, not because it was resolved. Q2 FY27 in October remains the decisive test. | Under Review |
| 06 Oct 2026 | Additional accumulation at ₹260.75. Stock at multi-year low ahead of Q2 FY27 results. Range compelling. Thesis still under active review — Q2 results due 30 Oct is the decisive test. | Under Review |
This timeline updates when something material changes — results, averaging, exit or thesis break. Not before.
Related Reading
- → IOC — Journal Entry — Entry Thesis April 2026
- → How I Identify Range-Bound PSU Stocks — My Approach
- → The NoTradeZone Methodology — How I Think About Entries and Exits
- → Why I Don’t Use Stop Losses — And What I Do Instead
About the Author
Jonathan — Endurance athlete. Investor by discipline. I document real trades in real time — entry prices, thesis, risks and honest updates. No tips. No calls. Just disciplined thinking, publicly archived.
All views expressed are personal. This is not investment advice. Please consult a SEBI registered advisor before making investment decisions.