ITC: Last chance to buy for Rs 8 payout; 4 reasons why brokerages are cautious despite the yield

The dividend record date is set for May 27, which means today effectively becomes the last opportunity for investors to buy ITC shares and become eligible for the payout. 

Why today matters for ITC investors

Dividend investing often creates short-term interest around stocks, especially when large companies announce healthy payouts. 

In ITC’s case, the company had earlier declared a final dividend of Rs 8 per equity share for FY26. 

However, this dividend is still subject to shareholder approval at the company’s Annual General Meeting scheduled for July 23.

Once approved, the dividend payment is expected to be credited between July 24-29.

Now comes the important part for investors. Since Indian stock markets follow a T+1 settlement cycle, investors purchasing ITC shares today are likely to receive the shares in their demat accounts by May 27 – the official record date fixed by the company.

That makes today the final buying window for dividend eligibility.

Investors buying the stock on or after May 27 may miss out because the shares may not get credited to their accounts before the company finalises the shareholder list for dividend payment.

Motilal Oswal and JM Financial on ITC – Here’s what the brokerage says

Brokerage houses such as Motilal Oswal and JM Financial have shared their outlook on this stock. Motilal Oswal has given a ‘Neutral’ rating to the stock, while JM Financial has assigned an ‘Add’ rating. Let’s take a look at what the brokerage houses are saying about the stock.

Motilal Oswal sees earnings pressure in the near term

Motilal Oswal has set a target price of Rs 335 on the stock, implying an upside of nearly 9% from current market levels. According to the Motilal Oswal report, ITC is still in the process of passing on the recent tax hike to consumers, and the slower-than-expected price increase is likely to impact earnings during FY27.

The brokerage stated, “Cigarette revenue and EBIT performance will be quite volatile in the near term.” 

As per the Motilal Oswal report, the company’s gradual price hike strategy is aimed at reducing the shift of consumers from legal cigarettes to cheaper illegal products. However, this cautious approach could increase near-term earnings risk for the company.

The report further stated, “The price hike on cigarettes is slower than expected and is expected to impact earnings in FY27.”

Illegal cigarette trade remains a concern

According to Motilal Oswal, competitive pressure from illicit cigarette trade continues to remain a major challenge for the formal tobacco industry. The brokerage believes that even though ITC has a wide cigarette portfolio across different price segments, illegal trade may still affect volumes and profitability.

The brokerage noted, “Competitive pressure from illicit cigarettes will take a toll on the formal cigarette industry.”

Despite improvement in the FMCG and paper businesses, Motilal Oswal believes pressure in the cigarette division could limit near-term triggers for the stock. The report added, “We maintain our Neutral rating on ITC with our SoTP-based TP of Rs 335.” 

JM Financial retains ‘Add’ rating

Meanwhile, JM Financial has maintained an ‘Add’ rating on the stock with a target price of Rs 325, indicating an upside potential of around 5.5%.

According to the brokerage report, cigarette sales trends during the fourth quarter of Financial Year 2026 were impacted after the sharp tax increase implemented in February 2026. However, the brokerage believes the quarterly numbers do not fully reflect the underlying demand trend.

The brokerage stated, “ITC’s strategy is to protect market share and curb illicit trade.”

Premium products may help offset pressure

As per the brokerage report, ITC has introduced premium cigarette variants across different price categories to reduce the impact of consumers shifting towards lower-priced products. JM Financial believes this strategy, along with ITC’s broad product portfolio, may help the company manage the challenging business environment better.

However, the brokerage cautioned that investor sentiment may remain weak until there is more clarity on the impact of tax hikes on cigarette volumes and profitability.

JM Financial stated, “Stock is likely to remain under pressure till clarity emerges on cigarette volume/EBIT impact.”

ITC share performance

The share price of ITC plunged 2% in the last 5 days.

The decline becomes sharper over longer periods, with the stock down nearly 17% on a year-to-date basis, falling 25% in six months.

The share of the company fell almost 31% over the past year.