 "ITC Limited")
Shares of ITC were trading 8% higher at Rs 319, rallied nearly 19% from its 52-week low on the National Stock Exchange (NSE).
The stock of cigarettes makers touched a 52-week low of Rs 268 on Monday in intra-day trade, following the increase in excise duty on cigarettes in the Union Budget.
The counter has seen huge trading volumes with a combined 14.68 million shares changed hands on the NSE and BSE till 10:00 AM.
The Union Budget announced on Monday an increase in additional excise duty (AED), which forms a very small portion of the overall excise duty on filter cigarettes while kept the Basic Excise Duty (BED) unchanged for FY17.
According to Antique Stock Broking, this development as quite positive from ITC's point of view as after 5 years of incessant increase in excise today rates (2x in 5 years across all lengths), the legal cigarette industry was given a relief in the form of a benign increase of 10% in Total Excise Duty (TED).
“We also see this as an indication for not so harsh tax environment for ITC going forward as the current budget announcements take cognizance of the rampant growth in illegal trade in cigarettes. Illegal trade (tax evaded) has grown to be around 20% of total trade volumes from 10% 5 years ago, leading to loss of revenues for the exchequer, loss of volumes for the legal industry and no material reduction of smoking in India,” the broking firm said in a report.
The stock of cigarettes makers touched a 52-week low of Rs 268 on Monday in intra-day trade, following the increase in excise duty on cigarettes in the Union Budget.
The counter has seen huge trading volumes with a combined 14.68 million shares changed hands on the NSE and BSE till 10:00 AM.
The Union Budget announced on Monday an increase in additional excise duty (AED), which forms a very small portion of the overall excise duty on filter cigarettes while kept the Basic Excise Duty (BED) unchanged for FY17.
According to Antique Stock Broking, this development as quite positive from ITC's point of view as after 5 years of incessant increase in excise today rates (2x in 5 years across all lengths), the legal cigarette industry was given a relief in the form of a benign increase of 10% in Total Excise Duty (TED).
“We also see this as an indication for not so harsh tax environment for ITC going forward as the current budget announcements take cognizance of the rampant growth in illegal trade in cigarettes. Illegal trade (tax evaded) has grown to be around 20% of total trade volumes from 10% 5 years ago, leading to loss of revenues for the exchequer, loss of volumes for the legal industry and no material reduction of smoking in India,” the broking firm said in a report.
