ITC shares trade mildly higher despite fears of excise duty hike on cigarettes

ITC shares are in focus on the crucial Budget day today (February 1) as cigarettes may attract a 5 per cent hike in taxes. Ahead of the budget announcement, ITC shares traded mildly higher by 0.27 per cent or Rs 1.2 at Rs 448.75 per share on the BSE, while its day's low and high are Rs 444.45 and Rs 452.6 per share, respectively. 

If the hike in excise duty on cigarettes is announced, it will be the first such increase in four years. At present, the excise duty on cigarettes up to 65 mm  is Rs per 1,000 sticks and this is also applicable for filter cigarettes between 70 mm and 75 mm. Besides, there is a national calamity contingent duty (NCCD), which was put in place since 2023 and ranges between Rs 230 to Rs 850 per 1,000 sticks.

Zee Business Managing Editor Anil Singhvi on the ITC stock said that on the budget day, it is likely to move 2-3 per cent up or down. 

Other stocks from the pack including Godfrey Phillips India Ltd and VST Industries also traded with mild gains. However, amid high uncertainty around tax hike in the upcoming budget, all of the stocks tumbled up to 10 per cent in January. 

Analyst expectations on the excise duty hike

There is a view that in case the hike in excise duty on cigarettes is over 10 per cent, the stock price of ITC will be weighed down. Nonetheless, no hike scenario is considered to be the best case for cigarette stocks, followed by a single-digit hike that indeed can be easily absorbed by cigarette companies.

ITC shares in focus amid demerger news 

ITC shares hogged the limelight on a more recent basis post the demerger of the company's hotels business- ITC Hotels- which is now a listed entity trading on the bourses.