ITC Share price: Perhaps, not a good day for India's tobacco players on the Dalal Street. Major industry players like ITC and Godfrey Phillips witnessed a decline of nearly 3 per cent on NSE and BSE following GST council's proposal to hike the tax rate on 'sin goods' to 35 per cent from the earlier 28 per cent.
At 01:25 pm, ITC shares were trading at Rs 469.75 down by nearly 1.56 per cent on the NSE. Shares of Godfrey Phillips also followed a similar trail and plummeted by more than a per cent on the bourses.
However, the decline was not just limited to tobacco players but aerated beverage industry as well. The shares of the Varun Beverages, a major manufacturer, distributor and seller of carbonated soft drinks, also experienced a similar decline in its share price.
The shares of the company were trading at Rs 619, down by nearly 2.19 per cent on the NSE.
"The GoM has agreed to propose a special rate of 35 per cent on tobacco and related products and aerated beverages. The four-tier tax slab of 5, 12, 18 and 28 per cent will continue and a new rate of 35 per cent is proposed by the GoM,"an official said.
Pressure Builds after GST rate hike
While the financial performance of these companies has largely remained in the optimistic territory, pressure continues to mount, especially for ITC. The consumer goods giant saw only a minor uptick in profits. Plus, the broader FMCG downturn coupled with declining urban consumption might create additional challenges for the company.
As for Varun Beverages, things can get a bit blurry since the company relies heavily on the carbonated soft drink (CSD) segment.
Meanwhile, Godfrey Phillips India did record a double digit rise in consolidated net profit, but the company is still recovering from a recent succession war.
For now, the impact of the GST hike proposal remains more of a wait-and-watch play for these companies.
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