Excerpts from CNBC-TV18's interview with Nikhil Vora:

Q: What is your verdict on the numbers?

A: It is perfectly fine in terms of what our thought process was - in terms of the profitability and the underlying growth of cigarettes. The numbers do not surprise us; so we are comfortable with the numbers.

Q: What is your rating on ITC at Rs 166?

A: We have a buy on the stock that remains. I think near term uncertainty with regards with VAT has been an overhang on ITC, but the fact is that the company has still been able to grow in volumes and manufacture cigarettes around 7-8% over the last seven to eight quarters. So, the ability to pass through now will be far higher than what it has been historically.

Q: What sort of earnings and price targets would you put out now on ITC, based on what you have seen?

A: We have a price target of Rs 210 on ITC and that remains. The earnings are still likely to grow at around 10% in the current year, despite the VAT impact. So our earnings estimates are slightly in contrast to the broad market estimates. We think ITC is in a better position now to pass through the VAT impact through price increases, which they have done in recent times.

Q: What have you made of plans to set up a strategic business unit, or SBU, for home and personal care products? Are they diversifying interestingly enough?

A: I think it is a brilliant move. The fact is that even if you look at the current categories of non-cigarette FMCGs, the bleed has come down significantly; they have reduced the bleed by around 500 bps in the current year. The historic topline is starting to make money for ITC in that business. They are growing that segment by 60% odd and getting into HPC, the natural process for becoming a pure personal care or a consumer product company. I am pretty impressed with the way the continuous investments are happening in the company. So, it is a positive move.

Q: Any concern on operating margins at all?

A: Not at all. If you look at the margin structure in the current year, they have grown universally across the board; cigarette margins have grown about 80 bps in the current year itself, while overall margins have been stable. So, I do not see any negativity in the numbers till last year. There maybe a couple of quarters of slightly low returns due to the VAT. So I do not think those are concern zones for investors who are willing to play out on a longer term basis on ITC.