ITC nosedives 11% after surging 3%; Godfrey, Golden Tobacco too slip; duty hiked to 25%

NEW DELHI: Stocks of cigarette manufacturers nosedived in the afternoon trades after rising as much as 12 per cent in trade today after the government hiked excise duty on cigarettes of sub-65mm size to 25 per cent.

The finance minister in his Budget speech also hiked excise duty on cigarettes of other lengths by 15 per cent. This will raise cigarette prices, hurting cigarette volumes.

ITC, the largest tobacco company in India, slumped over 11 per cent to hit its intraday low of Rs 350. The stock was up around 3.5 per cent in morning trades.

VST Industries slumped 3.25 per cent.

This stock was up 5.33 per cent in morning trade. Golden Tobacco cut morning gains and was up mere 2.06 per cent. This stock was up 9.5 per cent in morning trade. Godfrey Phillips also erased gains; it touched an intraday low of Rs 543, down 5.4 per cent. This stock was up 11.4 per cent in trade.

Market participants were expecting the government not to raise excise duty this time, as rise in the duty could further exert pressure on volumes.11