Shares of ITC Ltd. surged by almost 4% to touch an 11-month high of Rs 489.75 on 23 July, following FM Nirmala Sitharaman’s budget speech, which announced no changes to tobacco taxation, benefiting stocks like ITC that rely heavily on cigarette revenue.

Last year, following a 16% surge in National Calamity Contingent Duty (NCCD), no changes were made in the rates of taxation on tobacco. The price of ITC shares has remained unchanged in one year and since January year-to-date, after strong growth in 2022-2023.

The prospective revival of rural demand is likely to increase the earnings of ITC’s non-tobacco segments, such as FMCG and Agriculture.

Rural allocation in the Union Budget was increased by 12% by the Finance Minister.  The stock is currently trading at 26 times the price-to-earnings ratio for the financial year 2025.

ITC’s non-cigarette EBIT could rise to 35%-40% of the company’s overall EBIT in the next 10 years, up from 20% now, according to a note from Macquarie.

The company’s board of directors will meet on 1 August 2024 to review and approve the financial results for the quarter ending 30 June 2024.

The company’s market capitalisation jumped to Rs 6.02 lakh crore.

At 2:46 PM, the shares of ITC Ltd. were trading 4.18% higher at Rs 485.80 on BSE.

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