ITC gains nearly 2% post price hike; Morgan Stanley maintains ‘Overweight’

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26 Aug, 2025 12:21

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Shares of ITC rose nearly 2 percent in morning trade on Wednesday after the leading cigarette maker increased the price products in three brands - Bristol, Flake Excel, and Capstan.

The Kolkata-headquartered company has increased its prices by about 7 percent to 14 percent. An ITC spokesperson said: "Prices of a few select brands have been marginally revised."

Price of Flake excel is hiked by 11 percent, Bristol by 6.7 percent and Capstan by 14.5 percent by the company.

Reacting to the news, Morgan Stanley maintained its Overweight call on ITC with a target of Rs 320 which translates into an upside of 13% percent from Tuesday’s closing price of Rs 282.

The rise in cigarette price is likely to drive the stock higher in the near-term. Bristol, Flake Excel, and Capstan brands account for 20 percent of the company’s volumes.

Morgan Stanley sees the stock trending higher from current levels. Visibility for FY20 cigarette EBIT growth has improved.

The company is now one of very few pure-play combustible cigarette companies in the world. “In our base case, expect a relatively stable tax policy for cigarettes hereon,” said the note.

Another brokerage firm, Sharekhan maintains its buy rating on ITC. “It is one of the cheapest stocks in the large-cap FMCG basket and any adverse impact on share price should be an opportunity to buy the stock,” said the note.

The company has taken a ~2-3 percent price increase in its portfolio (largely at the lower end of the brands). Sharekhan sees a limited impact of 1-1.5% on FY2020 earnings.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.