ITC Leads Gains After Fewer Cigarettes Taxed: Mumbai Mover

Source from:  Bloomberg Businessweek 03/23/2012

Tobacco companies ITC Ltd. (ITC), and Godfrey Phillips India Ltd. (GP) rose after the Indian government increased excise tax on fewer types of cigarettes than expected. ITC, India's largest cigarette maker, rose as much as 7.7 percent to 225 rupees in Mumbai, the highest level since its listing in January 1991. Godfrey Phillips surged as much as 7.4 percent to 3,225 rupees. The government will levy an additional 10 percent tax of the current duty on cigarettes of of more than 65 millimeters, Finance Minister Pranab Mukherjee said today while announcing the nation's annual budget. The tax will be added on an ad valorem basis. The additional ad valorem levy will be charged on 50 percent of the retail sale price of a packet of cigarettes, the minister said. "Market had factored a hike in excise duty on all types of cigarettes, which did not happen," said Savio Shetty, analyst with Prabhudas Lilladher Pvt. "That is a relief." Kolkata-based ITC sells cigarette brands such as Wills and Gold Flake. Excise taxes on tobacco remained unchanged in last year's budget, after taxes on some cigarettes were raised by as much as 18 percent the year before. Some Indian states raised local taxes last year, which hurt volume of sales for ITC after the company raised prices to counter the increase. Enditem