ITC shares gained over 6 per cent to a fresh 52-week high of Rs. 304.80 on the National Stock Exchange on Monday. Including today’s gains, ITC shares have surged nearly 10 per cent in two trading sessions. ITC shares have witnessed buying after the Goods and Services Tax or GST Council announced rates on most of the products. “After more clarity coming on GST, it (ITC) looks good…The uncertainty over taxes is over now and taxes will not be tinkered in every 3-4 months now,” AK Prabhakar, head of research at IDBI Capital Markets and Securities, told NDTV Profit.
Although, cigarettes have been put in the highest – 28 per cent – duty slab in the GST regime, with an additional 5 per cent cess and another based on varying length, the overall tax impact is going to be neutral, analysts say.
Cigarette division contributed nearly two-thirds of ITC’s total revenues and after clarity coming on its taxation, the stock looks good from a long-term perspective.
“People who hold this stock should hold on to it. It is still the most attractive stock available right now, you have a clarity on rates… These rates are here to stay. It becomes a buy also,” Mr Prabhakar added.
Meanwhile, Mayuresh Joshi, fund manager at Angel Broking, told NDTV Profit: “The markets have to a large extent discounted the expected sin tax. With no significant increases expected on cigarettes once GST kicks in, a potential upside is left in ITC shares.”
Morgan Stanley has also maintained its “overweight” rating on ITC with a target price of Rs. 310 compared to Friday’s closing price of Rs. 286.20.
ITC shares closed 6.08 per cent higher at Rs. 303.60, compared to a 0.11 per cent gain in the broader Nifty.
[“source-ndtv”]
