Tobacco tax hits share values
The stock slumped 12% in Mumbai trade, erasing €6.5bn from the company’s market value. Godfrey Phillips India Ltd, which counts Philip Morris International as an investor, tumbled 3.7%. The government this week increased the levy on cigarettes by as much as 10%.
The higher levies prompted CLSA to ask its clients to sell ITC, while Credit Suisse, which said the duties were a “U-turn” from the government’s previous stance, cut its stock recommendation to neutral. Taxes on tobacco products were raised as the switch to a nationwide tax this month was handing a windfall to cigarette makers, Finance Minister Arun Jaitley had said.
