has taken a price hike of 7% to 14% in select brands, namely, Bristol, Flake Excel and Capstan, as per the media sources. These brands together contribute 10-13% to the total sales of ITC.
The price hike will aid the improvement in the EBIT margin of Cigarette segment. The stock price of ITC corrected post the Q3FY19 results because the company reported lower EBIT growth for the cigarette division at 8.8% instead of street estimate of double digit growth (11-12%) (Read more
ITC enjoys ~75% market share in cigarettes business. With acceptance of high cigarette price among consumers, we expect cigarette realisation CAGR of ~7% over FY18-21E and volume growth of 6% in FY19E and 1% each for FY20E and FY21E. We re-iterate our positive recommendation on the stock.
ITC Ltd ended at Rs282.65 up by Rs4.85 or 1.75% from its previous closing of Rs277.80 on the BSE.