Bullish on ITC's cigarette business in long term: Experts

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Fast Moving Consumer Goods (FMCG) player ITC's revenue declined 7.1 percent in the June quarter, but profits grew 3.6 percent to Rs 2,265 crore. The surprise element was a 400 basis points (bps) expansion in operating profit margin to 39.4 percent aided by 67 percent earnings before interest and taxes (EBIT) margins in the cigarette segment.  Suruchi Jain, Equity Research Analyst of Morningstar says decline in revenues and cigarette volumes is disappointing. She expects stricter regulations and hike in excise duty to weigh down the cigarette business in the near term. However, she is bullish on the stock and expects better performance in long term. Naveen Kulkarni, Co-Head Research at PhilipCapital, says the cigarette business will remain weak in Q2, but will start reaping results third quarter onwards. PhilipCapital is positive on ITC in long term and has a target price of Rs 300. Watch video for more.