The smoke signs for ITC are not looking good. After months of deliberations, Maharashtra decided to go ahead and ban sale of loose cigarettes, becoming the second state of Chandigarh to do so. This ban comes on the logic that loose sales do not carry any pictorial warning to act as a deterrent. The State has also announced that it would now be illegal to chew tobacco in public places.

Over 70% sales of cigarette companies across India comes from these ‘single’ cigarette and now to overnight ban them; it is sure to cause a lot of heartache. The existence of cigarette companies is like the evils of our life – they will continue to exist otherwise we will not know the presence of good. Anything which is banned immediately becomes attractive; that’s how human psyche works. Thus cigarette companies will continue to make profits as many smoke their health away to cancer while the Govt plays devil’s advocate.

The stock is currently down over 2% at Rs.324.45, the current intra day low; Godfrey Phillips is also down around 2% at Rs.514.