GST Impacts Cigarette Makers For The Worse, With ITC Leading The Pack
Cigarette manufacturers were badly hit on the stock market yesterday, with market leader ITC falling down to as much as 15 per cent to Rs. 276.90 on the BSE which reduced its market value to Rs. 3.37 lakh crore from Rs. 3.96 lakh crore the day before. The slump is a result of the GST panel hiking of compensation cess on cigarettes. The Sensex reached as much as 450 points and Nifty slipped down to 9792.05. Major losses were led by ITC, which has the second highest weightage (7.65 per cent) in Nifty. According to calculations by Nirmal Singh Lotus Green, ITC’s cigarette division contributes nearly two-thirds of the FMCG (fast moving consumer goods) total revenue. However, over 60 per cent of its business comes from cigarettes. Experts at Nirmal Singh Lotus Green say that the increase in cess is going to be negative for ITC. The increase in overall taxes is going to impact cigarette volume and earnings adversely. "For now, we estimate 10 per cent hike in taxes from...