ITC: Price Hikes Support Profitability Amid Cigarette Volume

remains in focus as lower cigarette volumes following tax changes are being partly offset by higher realisations, improving margins and phased price increases. 📊 KEY HIGHLIGHTS 🔹 Target Price: ₹440 🔹 Potential Upside: ~68% 🔹 Cigarette Tax Burden: ~65–67% of MRP 🔹 Pricing Strategy: Gradual price hikes across key brands 🔹 Margin Support: Lower-cost tobacco inventory expected to benefit from Q3FY27 🔹 FMCG: Healthy demand and improving consumption trends 🔹 Paperboards: Century integration expected to raise combined capacity to ~1.5 million tonnes 🔹 Technology: Proposed Happiest Minds transaction to strengthen AI, cloud, digital engineering and cybersecurity capabilities The cigarette business remains the key near-term focus, with pricing gains expected to partly cushion volume weakness. ITC's diversified presence across FMCG, paperboards, packaging, agri and technology businesses could provide additional growth support. Overall: Improving realisations, margin recovery and diversification across non-cigarette businesses remain key factors for ITC's earnings outlook.