NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
ITC Ltd.'s December quarter (Q3 FY26) performance remained steady in its core cigarette division, while its FMCG arm delivered a healthy uptick in operating profitability. However, the brokerage has turned cautious after the sharp taxation changes announced in the recent GST and excise revisions—implemented from February 01, 2026—resulting in a steep rise in cigarette taxes. Motilal Oswal had downgraded ITC from Buy to Neutral after the announcement, citing the disrupted earnings outlook for the cigarettes business.
The stock has already corrected nearly 20% since the tax announcement was made on January 01, 2026. Earnings pressure on cigarettes would take away the near-term catalysts (soft tobacco prices, recovery in FMCG and Paper) and comfort on valuation.
ITC has a full cigarette portfolio to better navigate the tax increase, but competitive pressure from illicit cigarettes will take a toll on the formal cigarette industry.
Motilal Oswal has reiterated its Neutral rating on ITC with a SoTP-based target price of Rs 365 per share (valued at 21× Dec'27E P/E). The brokerage believes the stock lacks immediate catalysts as the industry adjusts to the new tax structure.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Watch LIVE TV, Get Stock Market Updates, Top Business, IPO and Latest News on NDTV Profit.
