ITC's top deck sold their stake ahead of Budget 2013

Several directors of India's top cigarettes company -ITC have sold a significant part of their shareholding in January and in the weeks ahead of the Union Budget after the company announced its results for the quarter to December. The ITC stock gets negatively impacted after most budgets since cigarettes typically attract higher excise duty.

The company's chairman YC Deveshwar sold 9 lakh shares on February 1 out of 24.56 lakh shares he held. Several directors like PV Dhobale, SH Khan, K Vaidyanath, PB Ramanujam and SSH Rehman also have sold smaller holdings ranging between 10,000 to 25,000 shares.

While one may suspect that the top management is trying to make the most of the recent rise in the stock price ahead of the budget, analysts on the Street do not believe so. "Many times, the directors have to buy shares under the ESOPs scheme. They therefore first liquidate part of their current shareholding to raise funds to exercise their option to buy new shares", said an analyst from a foreign brokerage who wish not to be named.

Perhaps to validate this point, the company's non-executive director, SB Mathur bought 55,000 shares on February 25.