FMCG major ITC stocks rallied on Tuesday on lower-than-expected hike in excise duty on cigarettes. Finance Minister Arun Jaitley on Monday while presenting Budget for 2016-17 proposed to increase excise duties on various tobacco products other than beedi by about 10 to 15 per cent.
At 10 am, ITC stocks were trading 7.54 per cent up at Rs 318.10. The scrip opened at Rs 305 and has touched a high and low of Rs 318.40 and Rs 302, respectively in trade so far. Later, the share price of the company closed 9.91 per cent up at Rs 325.10.
According to analysts, hike in excise was along expected lines. Brokerage house Kotak Secutities said that the hike in excise duty on cigarettes is manageable. It has mainatined ‘Buy’ rating on the stock with target price of Rs 370.
ITC ended with a gain of 1.65 per cent at Rs 295.80 on BSE on Monday after the budget. Cigarette stocks, which witnessed intense selling pressure during the day on Monday after announcement of hike in excise duty on various tobacco products other than beedi in Budget 2016-2017, later pared the losses and ended with gains.
Other cigarette stocks also attracted buying, with Godfrey Phillips closing 9.86 per cent higher, Golden Tobacco ending 2.82 per cent up and VST Industries settling 3.03 per cent up.
With Reuters inputs