Jefferies has reiterated its buy call on ITC with a target price of ₹535 per share, noting that the upcoming GST Council meeting could provide much-needed clarity on the taxation of cigarettes. The brokerage said the current structure of 28% GST plus compensation cess, which is a mix of specific and ad valorem components, has created uncertainty and weighed on the stock’s recent performance.
Jefferies expects the council to move towards revenue neutrality, which it views as a potential relief for ITC. A steady mix of specific and ad valorem cess, the note added, would provide stability and reduce volatility in effective taxation rates.
The stock has been under pressure amid concerns over possible tax hikes, as well as overhang from British American Tobacco’s (BAT) stake in the company and rising competition from Marlboro. Jefferies, however, highlighted that a clearer tax framework would likely remove a key overhang and help sentiment stabilise.
Disclaimer: This article is based on brokerage views as cited. The views expressed are those of the brokerage and do not represent investment advice.
