ITC jumped 5.75% to Rs 302.35 at 14:00 IST on BSE amid hope that the stock could soon see a re-rating as the tax policy under Goods & Services Tax overhang ended.
Shares of ITC had gained 2.82% to Rs 285.90 on Friday, 19 May 2017 after the Goods & Services Tax (GST) council announced the tax rates for the various items on 18 May 2017. The stock has jumped 8.73% in two sessions to its ruling price of Rs 302.35 from a close of Rs 278.05 on 18 May 2017.
Meanwhile, the S&P BSE Sensex was up 145.83 points, or 0.48% to 30,610.75.
Higher than usual volumes were witnessed on the counter. On the BSE, 20.65 lakh shares were traded on the counter so far as against the average daily volumes of 11.97 lakh shares in the past one quarter. The stock had hit a high of Rs 302.40 in intraday trade, which is also a record high. The stock had hit a low of Rs 291 so far during the day.
The stock had hit a 52-week low of Rs 215.40 on 19 May 2016. The stock had underperformed the market over the past one month till 19 May 2017, rising 2.44% compared with the 3.85% rise in the Sensex. The scrip had also underperformed the market in past one quarter, gaining 6.58% as against Sensex's 7.01% rise.
The large-cap company has equity capital of Rs 1214.74 crore. Face value per share is Re 1.
The cess on cigarettes under GST tax rate was reportedly tax neutral for the company. The GST tax rate on cigarettes has been fixed at 28%, while a 5% cess and duty per stick will also be levied, bringing total tax incidence to the current range of 60%. Cigarette division contributed nearly two-thirds of ITC's total revenues.
ITC's hotel business will be taxed at a high 28%, however, reports said this was along the expected lines.
Shares of FMCG companies have been cheering on the bourses as the Goods & Services Tax (GST) council announced the tax rates for the various items on 18 May 2017. As per the GST tax rates announced, the impact is very positive for the FMCG companies and signals that the mass consumption items will be taxed lower.
The FMCG companies would witness the huge boost in its consumption since they now need to pay the lower taxes. GST council finalised lower GST rates for the FMCG products such as soaps, hair oil, edible oil and toothpaste among others.
Setting the stage for rollout of GST from 1 July, the Centre and states on 18 May 2017 decided on rates for specific products which may lead to lower prices for a majority of products of mass consumption.
The GST tax reform will subsume central and state levies such as excise duty, additional duties of customs, service tax, value added tax, central sales tax, entry tax, octroi and luxury tax and is expected to clean up the messy indirect tax structure.
ITC's net profit rose 5.7% to Rs 2646.73 crore on 4.1% increase in net sales to Rs 9149.31 crore in Q3 December 2016 over Q3 December 2015.
ITC is a diversified company, with presence in cigarettes, hotels, paperboards & specialty papers, packaging, agri-business, packaged foods & confectionery, information technology, branded apparel, personal care, stationery and other FMCG products. ITC is a market leader in cigarettes.
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