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Informist, Friday, Jan. 2, 2026                                      Tel +91 (22) 6985-4000

Equity Alert: Emkay Global, Prabhudas Lilladher downgrade ITC to 'reduce'

MUMBAI--0904 IST--Brokerage firms Emkay Global Financial Services and Prabhudas Lilladher have downgraded ITC to "reduce" and cut target prices on the stock by 26-34% after the proposed excise duty by the government on cigarettes. The brokerages see the move hitting the company's cigarette volumes. Earlier Nuvama Wealth Management downgraded its rating on ITC shares to 'hold' from 'buy.'

On the existing cigarette prices, Emkay Global sees the tax payout per stick rising by 26-50% across its cigarette portfolio. "We expect the portfolio to witness price hikes of 32% in a staggered manner," Emkay said. In 2026-27 (Apr-Mar), the brokerage expects a 27% price hike and 5% for FY28. Given the quantum of price hikes, Emkay expects volumes to be hit and hence sees a decline of 10% in cigarette volumes for FY27 and 2% for FY28. 

Prabhudas Lilladher estimates 23-50% hike in prices of various cigarettes post imposition of new excise rates. The current move takes the overall taxation on cigarettes from 50% to 61%, which is still significantly lower than recommended rate of 75% by the World Health Organization, the brokerage said. Although benefits of lower leaf tobacco prices and some price hikes will improve margins, overall profitability will suffer in medium term, it added. The brokerage expects a hit of 12.5% in volumes in FY27.  (Gopika Balasubramanium)

Equity Alert: Emkay sees Devyani-Sapphire merged entity sales up 15% FY25-28

MUMBAI--0835 IST--The combined entity formed by the merger of Devyani International and Sapphire Foods has a scale of around INR 78 billion as per 2024-25 (Apr-Mar) numbers, with a potential compounded annual growth rate of 15% in its revenue over FY25-28, Emkay Global Financial Services said in a report. The merged entity will have a 50–60% higher revenue and earnings before interest, taxes, depreciation, and amortisation scale as compared to current levels. The brokerage sees the merged entity having a similar revenue scale and EBITDA growth profile to that of Jubilant FoodWorks. The deal with Yum! India is also expected to provide better synergy for Devyani International, Emkay Global said. It has maintained a 'buy' rating on the Devyani International with a target price of INR 190, indicating an upside of 29% from current market price. On Thursday, shares of Devyani International ended slightly lower at INR 147.43 on NSE.

FY28 is likely to be the first year of combined operations and Devyani International expects to see full synergy benefits of INR 2.10 billion–INR 2.25 billion by FY29. Devyani International and Sapphire Foods will merge under a share swap deal. Shareholders of Sapphire Foods will get 1.77 shares of Devyani International for every one share held of Sapphire Foods. The brokerage expects shareholders of both companies to enjoy the potential synergy benefits equally. Additionally, Devyani International will acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad, for a consideration of INR 900 million. The company will pay a one-time charge of INR 3.20 billion to Yum! India, towards merger approval and grant of additional territory rights. Yum! Brands has agreed to continue supporting growth of both KFC and Pizza Hut in India along with approving a set of waivers and commercial arrangements.

After the merger, the overall combined network of both companies stands at 1,200 stores of KFC and around 1,000 stores of Pizza Hut in India. The brokerage sees cost synergies with optimisation of overhead costs being an easily achievable task. The brokerage highlighted that Sapphire Foods operates by a lower gross margin of 50–70 basis points than Devyani International across the Pizza Hut and KFC operations.

The brokerage expects the merger to resolve the tussle over Pizza Hut's expansion in common territories since Devyani International has delivery rights for most of India and Sapphire Foods has Pizza Hut rights for most of southern and western India. The combined entity should make faster decisions in terms of go-to-market strategy and new product innovations. Earlier, decision-making was being delayed due to the involvement of three separate decision makers – Devyani International, Sapphire Foods, and Yum! India.  (Eshitva Prakash)

Equity Alert: Indices seen up Fri; Nifty 50 may hit record high soon

MUMBAI--0830 IST--Benchmark equity indices are likely to rise further Friday amid expectations of the Nifty 50 index touching a lifetime high in the near term, analysts said. The 50-stock index ended above the 26100 level Thursday for the second straight session. The Street expects the December quarter earnings to be better than the first two quarters of the current financial year. Some analysts expect the indices to be volatile in January due to the quarterly results season. 

The 50-stock index is about 180 points away from the record high of 26325.80 points, hit in December. On Thursday, the 50-stock index closed 0.1% higher at 26146.55 points and the BSE Sensex closed 32 points lower at 85188.60.

Among sectors, analysts expect metal companies to do better in the near term after the imposition of 12% safeguard duty on imports of select products for three years. Analysts are also positive on metal companies continuing to post strong earnings on the back of a rally in base metal prices in the December quarter.

Among stocks, shares of cigarette companies are expected to face selling pressure following the imposition of an additional excise duty on cigarettes by the government. Consequently, Nuvama Wealth Management downgraded ITC to 'hold' from 'buy' with a target price of INR 415. Similarly, Emkay Global Financial Services downgraded ITC to 'reduce' from 'add' and cut its target price by 26% to INR 475. Prabhudas Lilladher downgraded the company to 'reduce' from 'buy' and cut its target price by 34% to INR 348.

Benchmark indices in the US were closed on Thursday on account of New Year's Day. Indices in Asia were mixed in early trade, with most of them trading with gains. Market participants will watch out for the first advance estimate of GDP for FY26 from the National Statistics Office, scheduled for release on Wednesday.  (Arundathi A R)

Equity Alert: Asian indices higher, KOSPI hits all-time high 

MUMBAI--0827 IST--Indices in Asia traded higher, with South Korea's KOSPI hitting an all-time high of 4263.13 points in the first trading session of 2026. The Australian S&P/ASX 200 Index was up after falling for four consecutive sessions, losing nearly 1% during the period. The index was closed Thursday on account of the New Year's Day. Some markets in Asia such as Japan and mainland China were closed for the New Year's holiday and the market in South Korea opened an hour later at 0630 IST. Data showed Singapore's economy expanded in the quarter ended December on the back of robust year-on-year growth in the manufacturing sector.

The FTSE Singapore Straits Times index was slightly higher as the country's economy grew 5.7% on year in the December quarter, against the 4.3% growth recorded a quarter ago. The expansion was led by 15% on-year growth in the country's manufacturing sector in the December quarter, jumping from the 4.9% growth seen in the previous quarter, according to a press release by Singapore's Ministry of Trade and Industry. Singapore's Prime Minister Lawrence Wong announced the economy had reported better-than-expected growth of 4.8% in 2025, as part of his New Year's message, according to a report by CNBC. The FTSE Singapore Straits Times index had touched its all-time high of 4667.60 points Tuesday. 

Investors in South Korea are focused on the first trading session of January, as the trend for the month is often seen as a 'barometer' to predict the performance for the rest of the year, according to a report by The Chosun. KOSPI clocked gains of 75.6% in 2025 owing to a recovery in the semiconductor industry, polices that helped enhance shareholder value, and improved transparency in the capital market, the report said. "An analysis of 26 sectors since 2013 shows that sectors that rose in January had approximately a 60% probability of also rising for the entire year," Kim Soo-yeon, a Hanwha Investment & Securities researcher was cited as saying by The Chosun. The January effect, first observed in US markets, refers to a trend of investors selling loss-making stocks by the end of the year to avoid taxes and then buying them back at the start of the year, resulting in a rebound in early-year stock prices, the report said.

Following were the levels of key Asian indices at 0825 IST:

(Akshat Saksena)

US$1 = INR 89.94

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Vandana Hingorani

All prices from National Stock Exchange, unless otherwise specified.

All percentage changes for share prices are rounded off to the nearest whole number; percentage changes for index values are rounded off to one decimal place.

All times are Indian Standard Time.

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