Macquarie downgrades ITC, cuts target to Rs 304 on fall in cigarette volume

ITC shares fell 2.5 percent to close at Rs 275.55 on Wednesday after Macquarie downgraded the cigarette major to neutral and preferred to switch to Hindustan Unilever, citing fall in cigarette volumes.

"Channel checks suggest that ITC cigarette volume has declined significantly in July-August," the research house said.

The research house has also slashed the target price to Rs 304 per share from Rs 340 per share, following a 2-5 percent cut in FY18/19 earnings on lower volume assumptions.

The company increased cigarette prices by around 14 percent in the last 9 months.

Brokerage Jefferies also downgraded the stock to hold and cut the target price, citing regulatory uncertainties leading to pressure on volumes and earnings growth.