More ITC stock upside with help from stable cigarette taxation

The ITC hit a 52-week high at Rs 285 before closing down 4% at Rs 284.35 on Friday, even as markets fell. Analysts say ITC is a defensive player in volatile markets with a high dividend yield, backed by its near monopoly in cigarettes, leadership in paperboard and packaging, steady growth in FMCG business and recovery in the hospitality segment.

A stable tax regime for cigarettes also helps. Motilal Oswal Securities has a buy with a target price of Rs 335.

He said: “While valuations of global tobacco peers have been restored to pre-pandemic levels, ITC is still trading at a 24% discount to its January 2019 valuation of 25.4x EPS. one year term.”

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