ITC dips ~6% over a 16% NCCD hike on cigarettes

ITC shares fell 6% after the government increased the National Calamity Contingent Duty (NCCD) on cigarettes by 16% in the FY24 Budget. This is significantly higher than the market expected.

For two years, the government did nothing about this duty. The NCCD was raised 2-4 times across cigarette stick sizes in the FY21 Budget, resulting in tax increases of 9-15%.

NCCD accounts for about 10% of total cigarette taxes.

Analysts believe that an increase of more than 12% would have a significant impact on cigarette manufacturers' volumes.

Other cigarette makers' shares also dropped 0.6% and 5%, respectively, to VST Industries and Godfrey Phillips.

However, the stock soon gained some ground and was later trading at Rs357.50, up by 1.46% against the previous close of Rs352.35 on NSE. The counter plunged to the day’s low of Rs329.10.

For feedback and suggestions, write to us at editorial@iifl.com