Tobacco stocks such as ITC, Godfrey Philip and VST Industries gained as the Finance Minister did not hike the excise duty/NCDD on cigarettes and other tobacco products.
Ahead of the Budget, experts had said ITC sees a low chance of a sharp cigarette tax hike in the upcoming budget, given last year's small increase. Historical data shows that steep tax hikes lead to limited revenue growth and a rise in illicit trade.
"Raising excise duty or NCCD duty on cigarettes and tobacco products will be negative for cigarette companies," stated a recent report by Axis Securities.
At 12.40 pm, Godfrey Phillips India shares were quoting Rs 4,685.9, higher by 3.7 percent, while VST Industries were trading around Rs 322.3. ITC shares hovered near the Rs 460-mark, up 2.6 percent.
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“Steady macro and government initiatives such as stable taxes are expected to further help ITC to sustain volume growth,” said Motilal Oswal.
The excise duty on cigarettes up to 65 mm in length is Rs 5 per 1,000 sticks, extending to filter cigarettes between 70 mm and 75 mm. Additionally, the National Calamity Contingent Duty (NCCD), in place since 2023, ranges from Rs 230 to Rs 850 per 1,000 sticks.
ITC shares have been in focus following the demerger of its hotels business, which recently debuted on the bourses. Among 40 analysts covering ITC, 34 recommend a "buy," four suggest "hold," and two have a "sell" rating.
Further, ITC shares also gained as the Finance Minister Nirmala Sitharaman announced that income up to Rs 12 lakh will be tax-free. This move in the Union Budget 2025 is expected to boost consumption by increasing household income, thereby driving demand for consumer staple products.
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