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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).

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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.


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