Axis Securities see the tax hike on cigarettes announced in the budget having minimal impact on ITC as they expect the resultant 1-3% price hike will have a "negligible impact on volume growth."

The ITC Analyst: Preeyam Tolia for Axis Securities maintained the ‘buy' rating for the stock and upgraded the price target from ₹400 to ₹410.

The ITC Thesis: In a research note, Axis Securities said, that the 16% hike in National Calamity Contingent Duty (NCCD) — after a gap of two years — on cigarettes is below theirs and street expectations. 

See Also: ITC Shoots Up 5% To Hit 52-Week High As Cigarette Stocks Pick Up Momentum After Initial Budget Scare

The brokerage firms expect "the narrative around the ITC to get stronger" because of the stable volume growth in cigarettes, resultant of market share gains, and new product launches. It also sees "strong and stable growth in hotels, paperboard, and agribusiness."

The firm notes that all these factors make ITC “a better play" among the high-valuation FMCG stocks.

Price Action: Ahead of its scheduled earnings report disclosure, ITC shares were down 1% to ₹374.80 in the early hours of trading.

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