Tobacco stocks in focus; Godfrey Phillips up 16% intra-day

ITC and VST Industries were up 3% on NSE.

Shares of tobacco stocks were in focus with ITC, Godfrey Phillips India and VST Industries rallied by upto 16% in intra-day trade on value buying.

Most of these stocks had corrected between 25% and 40% from their recent high touched in July, after the Goods and Services Tax (GST) Council increased cess on cigarettes.

Godfrey Phillips India surged 16% to Rs 1,054 in intra-day trade on the National Stock Exchange (NSE) on Wednesday, on back of over five-fold jump in trading volumes. A combined 1.13 million shares changed hands on the counter on BSE and NSE so far.

The company had posted a net loss of Rs 3.14 crore in June quarter (Q1FY18), against profit of Rs 22.38 crore in year ago quarter. Net sale grew 5.6% to Rs 492 crore from Rs 466 crore in the corresponding quarter of previous fiscal.

The cigarette business of the company was adversely impacted during the quarter as the impending GST legislation w.e.f. July 1, 2017 had led to substantial de-stocking by the trade particularly in the month of June, 2017.

ITC was up 3% to Rs 279 on the BSE. The stock had corrected 23% from its record high of Rs 353 touched on July 3, 2017 in intra-day levels, till Monday. On comparison, the Nifty 50 index gained nearly 1% during the period.

ITC has been in focus over government’s flip flop on GST rates on cigarettes. Now that the issue is settled and the GST rates would be 8-9% higher than the pre-GST indirect tax incidence on cigarettes business.

“ITC has undertaken a weighted average price increase of 6-7% across most of its key brands. Although this will have an adverse impact on volume growth, we expect the margins on cigarettes business to improve on the back of price hike,” analyst Reliance Securities said in recent report.

Company	14/08/2017	LTP	% chg	1-year high	1-year high date
ITC	271.15	279.20	2.97	367.70	10/07/2017
VST Inds.	2728.00	2821.00	3.41	3875.00	03/07/2017
Godfrey Phillips	912.40	1040.15	14.00	1542.50	18/10/2016
LTP : Last traded price on NSE in Rs at 03:11 pm