ITC shares rose 3.7% after Budget 2024 as Jefferies upgraded it to ‘Buy’. The stock jumped 19% to a high of ₹510.60 in July. Unchanged tobacco tax, stable GST rates and rural allocations boost non-tobacco businesses.
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Budget 2024: ITC shares jumped nearly 4 per cent to cross ₹500 mark for the first time on Wednesday, July 24, extending gains after rallying 5.5 per cent in the previous session.
The momentum came after brokerage house Jefferies upgraded the stock to “buy” after finance minister Nirmala Sitharaman announced no change in tobacco tax in her budget address on July 23. Jefferies has set a target price of ₹585 for ITC, implying a potential upside of 15.5 per cent.
The stock climbed as much as 3.7 per cent during intra-day trading and hit a new high of ₹510.60. In the past one year, ITC has gained 10.5 per cent and 4.4 per cent in the past month. Notably, the stock has gained over 19 per cent so far in July and nearly 28 per cent from its 52-week low of ₹399.30 hit on March 12, 2024.
The Finance Minister’s decision to keep the tax on tobacco unchanged comes after a significant 16 per cent hike in the National Calamity Contingent Duty (NCCD) last year. This stability has positioned ITC as one of the top performers in the benchmark indices, Nifty 50 and Sensex.
Jefferies commented, “No news is good news for ITC”, highlighting that unchanged tobacco taxes and potentially stable GST rates until March 2026 are key positives for the company.
Additionally, the demand outlook for the staples sector is improving. An expected revival in rural demand is expected to benefit ITC’s non-tobacco businesses, such as FMCG and agriculture. The Finance Minister increased the Union Budget’s rural allocation by 12 per cent, further bolstering this positive outlook.
Experts also pointed out that the higher tax rates announced by the Finance Minister under the new tax regime, as well as raising the standard deduction from ₹50,000 to ₹75,000, will result in a net tax saving of about ₹17,500 for individuals. This is expected to benefit ITC as well as FMCG sector companies including HUL, Dabur and Nestle.
