Cigarette Excise Hike Hits ITC; Devyani-Sapphire Merger Boosts QSR: Nuvama

• Nuvama's Abneesh Roy is cautious on ITC due to a sharp, higher-than-expected cigarette excise duty hike, impacting volumes and earnings.
• ITC is expected to implement gradual price increases over two quarters to pass on the tax impact, with potential volume decline in FY27.
• PL Capital's Amnish Aggarwal warns of unprecedented tax hikes, double-digit volume falls, and a hit to ITC's P/E multiple, citing structural concerns.
• The Devyani International and Sapphire Foods merger is viewed positively for the QSR sector, promising cost synergies and improved execution.
• Nuvama recommends Nestle India, Britannia Industries, Godrej Consumer Products, Marico, and Asian Paints in FMCG, with Tata Consumer Products for long-term tracking.

Why It Matters: Nuvama sees ITC facing headwinds from excise hike, while Devyani-Sapphire merger brightens QSR outlook.