During the three years from FY17 to FY20, ITC’s earnings per share has grown at 47 per cent, while return on capital employed (ROCE) moved up from 61 per cent to 72 per cent in the same period. Besides, ITC’s ESG (environmental, social and governance) overhang is reducing. “We are positive on the outlook for ITC despite ongoing structural headwinds (especially from ESG and slowing tobacco consumption). We expect a moderate cigarette tax environment over the medium term, which will support higher cigarette business profit growth versus the past five years. We believe the recent budget adds to our confidence in an environment of moderate taxation in the medium term, which allays one of the overhangs on the stock and should increase investor confidence. Valuation remains reasonably attractive, even adjusting for ESG,” says a recent Morgan Stanley India report.