Budget Impact: ITC shares breach ₹500 for the first time on unchanged tobacco taxes, Jefferies’ upgrades to buy

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ITC shares surged almost 4 percent, breaching ₹500 for the first time on Wednesday, July 24. The rally extended gains from the previous session’s 5.5 percent increase. As published in The MINT, This rise was driven by brokerage firm Jefferies upgrading ITC to a “buy” after Finance Minister Nirmala Sitharaman’s Budget 2024 announcement kept tobacco taxation unchanged. Jefferies set a target price of ₹585, indicating a potential 15.5 percent upside. The stock reached an intra-day high of ₹510.60, reflecting a 19 percent increase in July and a 28 percent rise from its 52-week low of ₹399.30 on March 12, 2024.

The Finance Minister’s decision to maintain stable tobacco taxes, following a 16 percent hike in the National Calamity Contingent Duty (NCCD) last year, has been a significant positive for ITC. This stability has positioned ITC as a top performer on benchmark indices Nifty 50 and Sensex. Jefferies noted that “no news is great news” for ITC, highlighting the unchanged tobacco taxes and likely stable GST rates until March 2026 as significant positives. The budget also increased rural allocation by 12 percent, which is expected to boost ITC’s non-tobacco businesses such as FMCG and agriculture.

Experts pointed out that higher tax rates under the New Tax Regime, combined with increased standard deductions from ₹50,000 to ₹75,000, will result in net tax savings of approximately ₹17,500 for individuals. This is expected to benefit corporations in the FMCG sector, including HUL, Dabur, and Nestle, alongside ITC.