u/Shivaissupreme

The author argues that the market's tax-driven selloff in ITC is sentiment rather than a structural threat, because cigarettes are highly inelastic and ITC controls roughly three-fourths of India's legal cigarette market, giving it pricing power to pass on higher taxes. He expects short-term volume pressure, EPS cuts and stock volatility, but says medium-term business impact is limited and long-term cash flows, high ROCE and dividends remain intact. The main stated risks are that excessively sharp tax hikes can push some demand toward illicit cigarettes and that cigarette volumes are not a long-term growth story, which is why ITC is diversifying.