February 14, 2017 / 18:03 IST
Axis Direct's research report on ITC After five consecutive years of double-digit excise increase (CAGR of 18% over FY12-17), the excise increase on cigarettes for FY18 was a reasonable 6%. The uncertainty on the GST rate and modality still lingers but the finance minister has mentioned in various forums that GST implementation is not a tax increase exercise and is largely going to be revenue neutral and in sync with current rates.
Outlook
With 7% price hike, we expect 2.5% volume growth and 15% cigarette EBIT and EPS growth in FY18. Mid-teens EPS growth after two years of single-digit EPS growth (EPS CAGR of 4% over FY15-17) coupled with second consecutive year of volume growth keeps us positive despite ~40% stock price appreciation since the last budget. Maintain BUY with revised TP of Rs 295 based on forward P/E of 26x (vs. Rs 280 earlier).
For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
Read More
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
