Reuters Market Eye - Shares in ITC fell over 1 percent after a proposal in the budget on to raise the excise duty by about 18 percent 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 percent 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 percent y-o-y in FY14," Goldman Sachs says in a report.
(Reporting by Abhishek Vishnoi)