Tobacco stocks tank as new taxes to come into effect from Feb

Tobacco company stocks fell sharply on Thursday after the Ministry of Finance announced a new tax regime on tobacco products starting next month.

- SUNDAR SETHURAMAN

The stock of ITC, the market leader in Indian cigarette manufacturing, declined by 9.7 per cent and ended the session at ₹364, its lowest level since April 3, 2023, and the biggest single-day fall since March 23, 2020.

In a note on ITC, Jefferies said the company will have to hike prices by at least 15 per cent to pass on the overall impact to consumers.

“This will be a clear negative as volumes will be impacted and concerns would also reemerge on risk of losing some volumes to the illicit industry,” the note said.

G Chokkalingam, founder of Equinomics, said the tax hikes will have an impact on cigarette demand.