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AskMarketsLimited Public PreviewAskMarketsLimited Public PreviewITC is a cigarette cash machine racing to become a foods company before the taxman finishes the job. GST 2.0's 40% slab makes the transition urgent; a debt-free balance sheet and 5.16% yield buy it time.
India has raised the price of smoking again. GST 2.0 folded tobacco into a new 40% demerit slab, and Budget 2025-26 lifted the National Calamity Contingent Duty on top. No company feels that more than ITC, seller of most of India's legal cigarettes. Can it pass the tax through without pushing smokers toward smuggled packs?
The mechanism is old: cigarettes supply the cash, everything else spends it. That machine earned ₹21,018 crore in FY26, normalising after the hotels demerger's one-time gain inflated the prior year 1. Management is betting ₹20,000 crore over five to six years that foods and personal care — already reaching 26 crore households — become a second engine 23.
40% GST slab plus NCCD hike; price-pack pass-through decides volumes
₹20,000 crore capacity bet; rural recovery and quick commerce must lift volumes 2
Debt-free, ROCE 39%, 74.5% payout; 5.16% yield anchors returns 1
ESG screens cap the register; hotels split done, ~40% stake retained
| Company | Mkt cap | P/E | ROE | OPM | Rev 3Y |
|---|---|---|---|---|---|
| HINDUNILVR | 4.38L cr | 29.0 | 30.7% | 23.3% | 2.1% |
| ITC | 3.33L cr | 16.9 | 29.5% | 33.9% | 3.6% |
| HNDFDS | 7.0k cr | 44.0 | 14.8% | 8.7% | 17.8% |
| GODAVARIB | 1.2k cr | 52.7 | 0.4% | 6.1% | -0.4% |
| DAVANGERE | 337 cr | 41.5 | 2.0% | 19.4% | -5.2% |