Cigarette firm share prices up on back of Centre's decision

At a time when smokers as well as cigarette manufacturing companies in India are celebrating together following the government’s clarification that it has no immediate plans to ban sale of loose cigarettes across the country, share prices of several tobacco companies soared.

Shares of Kolkata-based ITC zoomed 5.45 per cent to Rs 383.05 with volumes of 1.77 crore shares on NSE. Godfrey Phillips India’s shares ended nearly 5 per cent higher at Rs 619.75 while VST Industries ended over 4 per cent at Rs 1,940.

Shares of all these companies had tanked in the range of nearly 3-7 per cent when the government had indicated that it is planning to ban sale of loose cigarettes. The government had on Wednesday said that it will study the impact of cigarette ban on tobacco farmers and keep a hold on ban of loose cigarettes.

According to a note released by IDFC dated December 3, the proposed ban would have had significant impact on the industry if the ban had been implemented.

“Loose cigarettes form 65-70 per cent of total cigarette sales in India; hence, the proposed ban would have theoretically had a significant impact on industry volumes,” IDFC said in the note. The fact that the ban may not see the light of day from the ministry, itself shows the scale of this decision and the impact it would have on various fronts.

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