Stocks

ITC slumps after tax increase on cigarettes

Reuters | Updated on January 11, 2018

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India's biggest cigarette maker ITC Ltd fell as much as 15 per cent to its lowest since May 15. Godfrey Phillips India Ltd too fell as much as 10.4 per cent to its lowest since April 19.

On Monday, t he GST Council raised total tax on cigarettes, resulting in an increase of as much as Rs 792 ($12.31) for every 1,000 cigarettes.

The tax follows an uproar from anti-tobacco and several health groups, and will be effective today.

ITC will need 12-13 per cent weighted average cigarette price hike hereon with about 20 per cent price increase in the King Size Filter segment (KSFT) segment to offset the tax increase, according to analysts at Morgan Stanley.

The analysts said they expected an incremental 8-9 per cent pricing action over the next few days.

ITC posted its biggest intra-day percentage fall since October 2012. Godfrey's intraday percentage fall biggest since November 16, 2016.

At about 9.50 am, ITC shares were down Rs 36.40 or 11.17 per cent at Rs 289.35 on the BSE. The stock opened at Rs 293.20 and fell to Rs 276.90 in early trade. The stock had closed at Rs 325.75 on Monday.

Similarly, Godfrey Phillips shares were trading down 4.58 per cent or Rs 56.20 at Rs 1,171.30 on the BSE. The stock opened at Rs 1,104.75 and traded between Rs 1,177 and Rs 1,100.05 against Monday's close of Rs 1,227.50.

Published on July 18, 2017

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