Budget 2016: ITC shares fall 7% as Arun Jaitley hikes excise duty on tobacco products
BT Online February 29, 2016
Stock of ITC along with other tobacco stocks tanked up to 7 per cent after Finance Minister Arun Jaitley announced a 10-15 per cent hike in excise duty of tobacco products in Budget 2016.
The hike, however, was in-line with the analysts' expectations.
ITC was the worst-performing stock on both the headline indices and hit an intraday low of Rs 268, down 7.90 per cent on the Bombay Stock Exchange (BSE).
Cigarette industry continues to post volume decline in the last few quarters given multiple excise duty hike initiated by the government for four consecutive years.
"We expect ITC to implement a weighted average price hike of 10-11 per cent to pass on the excise duty increase. We model in cigarettes volumes decline of 8-10 per cent in fiscal year 2016-17," said Motilal Oswal in a pre-budget note.