CLSA maintains ‘buy’ call on ITC with a target of Rs 330

A man talks on his mobile phone as he walks past an ITC office building in Kolkata September 4, 2012. ITC Ltd sells 80 percent of the cigarettes in the world's second most populous country where 275 million people use tobacco products. But as India follows the rest of the world in adopting anti-smoking regulations, the company's core tobacco business is getting squeezed and it is venturing into dairy products, drinks and perhaps even healthy breakfast foods to try to expand its money-losing consumer products business. Picture taken September 4, 2012. REUTERS/Rupak De Chowdhuri (INDIA - Tags: BUSINESS HEALTH) - RTR37J7R

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Global investment bank CLSA has maintained a buy call on ITC, citing factoring in of a weak volume trend. The target price is at Rs 330, implying an upside of over 22 percent from the last close price of Rs 269.3.

Further, it highlighted how the stock see-sawed in 2017, largely on the back of flip-flop in tobacco prices. Going forward, it is concerned about overall collections in GST and any resultant impact of its shortfall on tobacco taxes.

It believes that a hike in cigarette tax could be needed in FY19 for state revenues to increase.

The stock was in the news recently on a media report of ITC looking to acquire Telangana-based Sirpur Paper Mills.

Sirpur Paper Mills, one of India's largest manufacturers of pulp, paper board and a variety of other papers, is currently undergoing insolvency proceedings at the Hyderabad bench of the National Company Law Tribunal (NCLT).

The stock has gained around one percent in the past one month, while its three-day gain is also above 1 percent. At 11:10 hrs, ITC was quoting at Rs 269.00, down Rs 0.30, or 0.11 percent, on the BSE. It touched an intraday high of Rs 270.90 and an intraday low of Rs 268.30.