Emkay keeps 'Add' on ITC, Rs 310 target as cigarette volumes seen falling high single-digits
Post the February 2026 tax hike, Emkay expects ITC's cigarette volumes to drop by high single-digits, but sees FMCG-Others (Aashirvaad, Sunfeast, Bingo!) growing ~10% YoY on premiumization and 100 new product launches. EBITDA margin pegged at 10%, cash generation of Rs 15,000 crore in FY26, valued at 18x forward EPS.
What happened
Emkay maintains 'Add' on ITC with Rs 310 target, expecting high single-digit cigarette volume decline after February 2026 tax hike, while FMCG-Others
Key facts
- target Rs 310
- high single-digit volume decline
- FMCG-Others revenue +10% YoY
- EBITDA margin 10%
- cash generation Rs 15,000 crore FY26
- BAT stake 22.91%
- 18x forward EPS
- 100 new FMCG products
- 15 new cigarette products
Why this matters
The widening gap between +10% FMCG-Others growth and shrinking cigarette volumes strengthens the case for accelerating M&A and new-product bets to reduce reliance on the tax-exposed tobacco core.
What to watch
- February 2026 tobacco tax hike final rate and GST framework
- Illicit cigarette market share shifts / enforcement data
- FMCG-Others QoQ revenue growth vs 10% YoY guide
- Rs 15,000cr FY26 cash generation trajectory and dividend/buyback signals
- Forward EPS revisions and 18x multiple sustainability
- Track quarterly cigarette volume prints post-tax hike for elasticity confirmation
- Monitor new FMCG launch traction and premiumization mix within Aashirvaad/Sunfeast/Bingo!
- Watch peer FMCG (Britannia, Nestle) commentary on rural demand and input costs
- Reassess ITC target if EBITDA margin holds vs slips below 10%