With no tax hike on cigarettes in the finance bill, Finance Minister Nirmala Sitharaman confirmed that tobacco taxation will remain steady.
On Budget day, ITC shares closed 3.3% higher at Rs 462, while Godfrey Philips India surged 9.8%, and VST Industries gained 1.4%. The rally was also fueled by the government’s announcement that income up to Rs 12 lakh will be tax-free, a move expected to boost household income and drive demand for consumer staples.
ITC shares have been in focus following the demerger of its hotels business, which recently debuted on the bourses. Among 37 analysts covering ITC, 32 recommend a ‘Buy,’ three suggest ‘hold,’ and two have a ‘sell’ rating.
Brokerage views on ITC post Budget 2025
Jefferies
Jefferies has maintained a ‘Buy’ rating on ITC with a target price of Rs 550.
The brokerage sees ITC as a winner due to no increase in tobacco taxes. Additionally, GST rates are expected to remain stable until March 2026 as the Centre settles state dues. This stable taxation is seen as a positive factor that improves earnings visibility for the company. ITC is also expected to benefit from personal tax cuts and other related benefits.
Morgan Stanley
Morgan Stanley has maintained an ‘Overweight’ rating on ITC with a target price of Rs 554.
The brokerage expects a moderate cigarette tax environment over the medium term, providing stability for the company. Additionally, ITC is likely to experience near-term relief from demand disruptions, while taxes are expected to remain moderate and infrequent. A stable tax environment is anticipated to support low-single-digit volume growth over the medium term.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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