ITC slides 15% in two days as cigarette tax overhaul triggers Nuvama downgrade
A shift replacing compensation cess with higher excise duty lifts tax incidence over 30%, forcing an estimated 20% price hike and Rs 2-5 more per stick. Nuvama cut ITC to 'Hold' with a Rs 415 target (from Rs 534), lowering its multiple to 17x from 23x on demand-destruction risk. A 4% dividend yield and FMCG mix offer some support.
ITC shares fell ~15% after a sharp cigarette taxation shift replacing compensation cess with higher excise duty. Nuvama downgraded to 'Hold', cut target to Rs 415, forecasting a 20% price hike risking demand destruction; FMCG and dividends offer support.