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Ahead of the Budget, experts had said ITC sees a low chance of a sharp cigarette tax hike in the budget, given last year’s small increase
ITC Share Price
Investor sentiment towards consumer staples, particularly ITC, is poised to strengthen following positive recommendations from Jefferies and Morgan Stanley. Both brokerages have significantly raised their price targets after Union Finance Minister Nirmala Sitharaman did not announce any increase in sin taxes in the Union Budget presented on February 1, 2025.
Jefferies has maintained its Buy rating on ITC with a target price of Rs 550 per share. The brokerage believes ITC stands to benefit significantly, as the government opted not to raise tobacco taxes. Moreover, the stability in GST rates until March 2026 provides additional clarity for the company. While demand conditions remain somewhat challenging, Jefferies notes that the stable taxation environment boosts earnings visibility for FMCG companies. The personal income tax cuts are expected to spur consumption, with ITC positioned as a key beneficiary.
Morgan Stanley also reiterated its Overweight stance on ITC, setting a target price of Rs 554 per share. The brokerage pointed out that the budget alleviated concerns regarding potential tobacco tax hikes, often seen as a key risk factor. With strong fundamentals, ITC is well-positioned for sustainable growth.
Veteran market investor Samir Arora called the Union Budget a “dream Budget” and one of the best in years, particularly appreciating the income tax relief aimed at the right segments of the population.
Raamdeo Agrawal, in an interview with CNBC-TV18, said he expects the additional disposable income from tax cuts for individuals in the Rs 15-24 lakh income bracket (resulting in savings of Rs 70,000-80,000) to boost consumption. “That money will go into consumption, and the market is betting on that,” he added.
According to Motilal Oswal, the stable macroeconomic environment and government initiatives like consistent tax policies should help ITC maintain volume growth.
Before the Budget, experts had already anticipated a low probability of a sharp increase in cigarette taxes, especially given last year’s modest hike. Historical trends show that large tax increases often result in limited revenue growth and a rise in illicit trade.
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