ITC, United Breweries and Asian Paints among top picks for next 12 months: Nuvama's Abneesh Roy

What happened

Nuvama Institutional Equities named United Breweries, ITC and Asian Paints as top picks for the next 12 months. Abneesh Roy said ITC was upgraded from hold to buy, expecting no cigarette tax hike in the February 1 Union Budget.

Confirmed

Global impact / market context

A buy rating means the brokerage expects the share to rise. For ITC, cigarette taxes are a major cost for smokers and a major revenue source for the company. No tax increase would support cigarette profit and help the stock re-rate over six to 12 months.

Analyst inference

ITC's cigarette division saw a 7-8% volume decline and 27% profit decline, in line with estimates. Profitability is projected to turn neutral by Q4FY27. The stock trades at 16 to 17 times one-year forward earnings, which means investors pay that multiple of expected yearly profit.

Analyst inference

What to watch

1. The Union Budget on February 1 is the key event; the government is expected to maintain a zero probability of tax hikes on cigarettes after severe damage to the legal cigarette industry. Confirmed
2. Watch ITC's cigarette profitability turning neutral by Q4FY27, with digital-first brands like Yoga Bar at a ₹1,800 crore annual run rate, which means yearly sales pace. Analyst inference
3. Watch Marico's upgraded guidance across four metrics after a 10-12% correction from its top, and whether its diversification supports earnings at 45 times earnings. Analyst inference

Evidence

• Original source link unavailable