ICICIdirect maintained 'Buy' on ITC  with target price of Rs 387 against current market price (CMP) of Rs 346 in its report.

Commenting on the rationale, ICICIdirect said, "Finance Minister Arun Jaitley, in his FY15E Budget, hiked the excise duty on cigarette companies by 11-72% for a third year in a row. The excise hike has been undertaken at 72% for cigarettes below the 65 mm segment and in the range of 11-21% for those above the 65 mm segment.

This is the third consecutive year of 15%+ excise hike taken by the government. Following the significant hikes, though ITC's volume growth has suffered (-4% in FY14E), the company's strong pricing power has kept its earnings growth from cigarettes robust at 20.4% CAGR from FY12-14E.

Going ahead, given ITC's dominance (~75% share by volume) in cigarettes and cigarettes being a largely inelastic demand, we believe ITC would easily pass on the higher taxes through price increases and maintain a healthy cigarettes EBIT growth at 13.8% CAGR (FY13-16E). We maintain our BUY recommendation on the stock."