The shares of cigarettes maker ITC Ltd. surged 6.45% to hit their all-time high of Rs 384.70 during Thursday’s first half of the trading session. The stock of Kolkata-based tobacco manufacturer has generated an impressive return of over 65% in the last twelve months.
This is in sharp contrast to the previous trading session when the shares plunged as much as 6.5% in intraday trade. It was because of the proposal of Finance Minister Nirmala Sitharaman to increase the National Calamity Contingent Duty (NCCD) on cigarettes by 16%.
However, the investors quickly realized that the net price increase would be marginal and not likely to affect the demand. The brokerage firm ICICI Direct commented that the price of cigarettes in different categories will only rise by 1-3%.
Global brokerage firm Jefferies communicated, “The 16% hike in NCCD duty rate directly translates into a tax hike of 1.5% – including the impact of price hike (due to cascading taxes), overall tax hike comes to around 2%. This is a clear positive for ITC.”
ITC’s tobacco division still contributes to over 40% of the total revenue for the company. The balance comes from other segments such as FMCG, paper, and hotels.
As of 12:04 IST, the stock was exchanging hands at Rs 380.45 per share, slightly down from its day’s high but 5.41% for the day giving the large-cap conglomerate a market value of Rs 473,000 crore.
Written by Vikalp Mishra
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post ITC jumps 5% hits all-time high despite higher duty on cigarettes; Check experts view appeared first on Trade Brains.
