Prabhudas Lilladher Cuts ITC Rating to 'Reduce', Target Rs 348 Amid Excise Hike

• Prabhudas Lilladher downgraded ITC's rating from 'Buy' to 'Reduce' and cut the target price to Rs 348 from Rs 528.
• The downgrade is due to an expected significant impact from increased cigarette excise duty, leading to higher product prices (23-50%) and a 12.5% volume hit by FY27.
• The GOI's shift in duty structure stance could lead to further excise duty increases, despite current rates being lower than peak.
• Overall taxation on cigarettes rose from 50% to 61%, still below WHO's recommended 75%.
• Despite FMCG and Paperboard benefits, ITC's EPS CAGR is projected at only 4.5% over FY26-28, impacting medium-term profitability.

Why It Matters: ITC faces profitability challenges and a rating downgrade due to higher cigarette excise duties.