Budget 2023: ITC Shares Rebound As Analysts See Negligible Impact Of Duty Hike On Cigarettes
The Finance Minister said the National Calamity Contingent Duty is proposed to be revised upwards by about 16%.
Shares of ITC Ltd. rebounded by afternoon trade on Wednesday as analysts expect negligible impact of a duty hike on cigarettes.
The shares had, however, fallen as much as 6.6% following the proposed 16% hike in calamity duty by Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2023.
The National Calamity Contingent Duty on specified cigarettes was last revised three years ago.
"If it is only 16% increase in NCCD for cigarettes, then overall impact is negligible. Will see only low-single-digit hike of around 2% to 3%, which is not much of an issue," said Abneesh Roy of Nuvama Institutional Equities.
Shares of the company closed 2.57% higher, compared with 0.26% decline in benchmark Nifty 50.
The total traded volume stood at 6.8 times the 30-day average. The relative strength index stood at 75, suggesting that the stock may be overbought.
Of the 35 analysts tracking the company, 32 maintained 'buy', three recommended 'hold', while none suggested 'sell', according to Bloomberg data. The 12-month consensus price target implied an upside of 7.9%.
However, shares of Godfrey Phillips India Ltd. continued to trade lower and declined 5.36% at close. The scrip had fallen 7.5% to an intraday low of Rs 1,779 apiece.
"Net tax on cigarette would increase by Rs 0.07 per stick to Rs 0.12 per stick, which would require 1-3% price hike for cigarette in difference category. The hike in taxes is not very high and would be easily passed on by small increase (1-3%) in prices," ICICI Securities said.
