For any government which is desperate to mop up revenue, an easy target is obviously tobacco products. hardly any budget has spared this product and for ITC, the country's largest cigarette company, there are no surprises when it comes to the union budget. An increase in excise duty on cigarettes is a fait accompli.

Is it then a negative for the ITCBSE -0.12 % stock? The answer is a big NO. A historical analysis of ITC's stock movement ahead of a budget and on the budget day shows that the run-up to the budget provides a good opportunity to invest in the company's stock.

In the last 20 budgets since 1993, ITC's stock closed positively in 12 such years. Even in the eight years that the stock closed in the red on budget day, the recovery to pre-budget levels was swift.

Analysts have always maintained that an increase in excise duty on cigarettes has limited implications for ITC as the company enjoys strong pricing power and is able to pass on the tax burden to its consumers. This is validated by the company's performance on the bourses. In the last 15 years, the company's market cap has risen ten fold. According to Bloomberg data, of 48 analyst recommendations, the stock currently has 38 buy, 8 hold and 2 sell recommendations.