ITC jumps 1.5%, Credit Suisse maintains outperform.

Shares of  ITC rose 1.5 percent intraday on Wednesday. Credit Suisse has maintained outperform rating on the stock with a target of Rs 400. The brokerage is positive that excise duty hike on cigarettes is unlikely even though investors are nervous due to the Health Minister’s demand for a 100 percent-plus hike in cigarette excise. “The past track record of BJP governments both in the states and at the centre does not have any disruptive moves on cigarettes. Also, such a move will create a large illicit cigarette market. Another negative scenario will be a change in cigarette excise duty to ad valorem, which is also a low probability event,” it said in a report. According to Credit Suisse estimates, if the rise in excise duty is within 20 percent, then ITC is likely to deliver 16-20 percent earnings growth, and the stock will make up its underperformance to other consumer stocks. At the same time, it warns that if the government goes ahead with a 100 percent excise duty hike, then ITC is likely to see significant de-rating in P/E multiples in the near term. At 09:36 hrs ITC was quoting at Rs 340.70, up Rs 4.90, or 1.46 percent on the BSE.