Sharp Jump In MTF PositionsMotilal Oswal CautiousShares of ITC Ltd., the cigarette-to-hotels conglomerate, fell to a 52-week low on Tuesday, June 2, before staging a recovery from those levels to end higher.
"We expect volatility in cigarette volumes and EBIT to moderate from the initial transitionary phase.
It expects the agri and paperboards business to also see a gradual recovery.
"Positive catalysts such as improving FMCG performance and paperboard margin normalization are overshadowed by the cigarette earnings headwinds, stemming from illicit competition, constrained pricing flexibility and the inevitable volume-versus-margin trade-off, which will determine ITC's near-term trajectory," the Motilal Oswal note said.Shares of ITC ended 1.3% higher on Tuesday at ₹283.4.
The stock is down 9% in the last one month and over 22% so far for the year.
Sharp Jump In MTF Positions
Motilal Oswal Cautious
Shares of ITC Ltd., the cigarette-to-hotels conglomerate, fell to a 52-week low on Tuesday, June 2, before staging a recovery from those levels to end higher. The stock also snapped a four-day losing streak in the process.From its record high levels, which are close to ₹500, the stock is down over 40%.Despite the fall in the stock price, leveraged position takers are piling into the stock, as evident from the increase in its Margin Trading Facility (MTF) positions.According to data from the NSE's margin trading facility book, the leveraged positions of ITC have surged to ₹1,794 crore, as of June 1, 2026, implying a growth of 86.5% from the April 30 figure of ₹962 crore.As of April 30, ITC was the ninth most leveraged stock in the MTF book. With the increase in positioning, it has now jumped to second in the list, only behind HDFC Bank.Brokerage firm Motilal Oswal, in its latest note on Wednesday, June 3, said that it is cautious on the prospects of ITC, as its cigarette business earnings are under cloud.Motilal Oswal has a "neutral" rating on ITC with a price target of ₹300, which implies a potential upside of 6% from Tuesday's close.The note stated that the cigarette industry is witnessing one of its most disruptive regulatory resets after the implementation of GST 2.0."We expect volatility in cigarette volumes and EBIT to moderate from the initial transitionary phase. In this normalized phase, ITC's product portfolio, innovation pipeline and premiumization strategy will play a critical role in rebuilding the growth momentum and defending its market positioning," Motilal Oswal wrote in its note.However, it cautioned that the outlook for ITC's cigarette business is uncertain as the MRP revisions are still underway and therefore, it does not rule out the possibility of the stock facing further cuts to its earnings growth projections.Motilal Oswal is working with a 15% revenue decline and a 19% drop in the Earnings Before Tax of ITC's cigarette business for financial year 2027.On the flip side, the brokerage highlighted the structural improvement shown by ITC's non-cigarette business with FMCG emerging as the key growth driver. It expects the agri and paperboards business to also see a gradual recovery."Positive catalysts such as improving FMCG performance and paperboard margin normalization are overshadowed by the cigarette earnings headwinds, stemming from illicit competition, constrained pricing flexibility and the inevitable volume-versus-margin trade-off, which will determine ITC's near-term trajectory," the Motilal Oswal note said.Shares of ITC ended 1.3% higher on Tuesday at ₹283.4. The stock is down 9% in the last one month and over 22% so far for the year.
