Cigarette stocks pile up gains

Cigarette stocks continued their rally for the second straight session, rising as much as 4.5 per cent, despite the government increasing taxes on all tobacco products in the Union Budget.

Shares of Golden Tobacco rose by 4.47 per cent, Godfrey Phillips went up by 1.82 per cent, ITC gained 1.48 per cent and VST Industries (0.69 per cent) on BSE.

These stocks had gained as much as 5 per cent in the previous session also.

"Marginally negative for cigarette manufacturers. The hike was lower-than-anticipated," Geojit BNP Paribas said in a report.

Smokers and tobacco consumers will have to pay more for their indulgence as Finance Minister Arun Jaitley continued with the crackdown on cigarettes, bidis and tobacco products by increasing taxes in the Budget 2017-18.
 

Excise duty on unmanufactured tobacco has been almost doubled to 8.3 per cent from 4.2 per cent earlier, while that on pan masala has been hiked to 9 per cent from 6 per cent.

Likewise, excise duty on cigar, cheroots has been changed to 12.5 per cent or Rs 4,006 per thousand, whichever is higher from 12.5 per cent or Rs 3,755 per thousand, whichever is higher. Excise duty on chewing tobacco, including filter khaini and jarda scented tobacco has also been doubled to 12 per cent from 6 per cent earlier.