ITC strikes back!

ITC is raising a good smoke today. Though the stock opened almost at the same level as yesterday’s close, it soon spurted up over 3% to Rs.347 and currently remains perky at Rs.345, up over 2%.

After being a ‘victim’ of the Budget, facing an excise duty hike for the fourth consecutive year, the company has struck back!  Though there is no official Press Release as such, news is that the company has hiked prices across all its brands. The average price hike is around 15%. The Govt has also hiked excise on tobacco from Rs.60/kg to Rs.70/kg and a price hike was inevitable except that no one had expected it come so soon.

But the company was really left with no option given the fact that its Q3 numbers itself had started pressure with cigarette sales showing a flat growth though the slowdown was blamed on price hike, excise duty and VAT. Once again there is a price hike and we could see some immediate plateauing of sales but over a period of time, people will adjust to the price hike.  This is seen by most fund houses and analysts as a positive move.