Cigarette stocks continued to remain under pressure; ITC tanks 5 pc

Cigarette stocks continued to remain under pressure on Monday led by ITC which tumbled up to 5 per cent as tobacco related products are set to become more expensive due to hike in excise duty proposed in the Union Budget for 2020-21.

Shares of ITC dropped 5.09 per cent to close at Rs 207.70 on the BSE.

VST Industries declined 1.48 per cent and Godfrey Phillips India fell 0.86 per cent.

Cigarette stocks on Saturday had also plunged up to 7 per cent, led by ITC.

A large number of items including cigarettes, chewing tobacco are set to become more expensive due to hike in taxes proposed in the Union Budget for 2020-21.

"As a revenue measure, I propose to raise excise duty, by way of National Calamity Contingent Duty on cigarettes and other tobacco products. However, no change is being made in the duty rates of bidis," Finance Minister Nirmala Sitharaman said.

While presenting the Budget on Saturday, the finance minister proposed to increase the National Calamity Contingency Duty on cigarettes, hookah, chewing tobacco, snuff and tobacco extracts and essence.

On increase in excise duty on cigarettes and tobacco products, HDFC Securities in a report said, "This will impact ITC and other cigarette companies, however, the extent of pass through and volume impact is uncertain at this point.