Shares of ITC fell 1% after a proposal in the budget on to raise the excise duty by about 18% on cigarettes was viewed negatively for India's biggest tobacco company.
While no ad valorem duty is seen as a positive, Goldman Sachs says ITC will likely need to increase prices by 15-25% to generate operating profit growth similar to the historical trend.
The investment bank sees the prospective price increases likely impacting volumes.
"We now estimate a volume decline of 1 percent y-o-y and overall price increase of 17% y-o-y in FY14," Goldman Sachs says in a report.