Decline in cigarette volumes to weigh on ITC

Price hikes could lead to deterioration in product mix of the cigarette business

The ITC stock shed 2.4 per cent on Wednesday, on worries that the company’s cigarette volume had declined significantly over the past two months after price hikes. The downgrades by Macquarie and Jefferies came on the back of regulatory uncertainties and decline in volume, impacting earnings growth.

The company has taken price hikes to neutralise an increase in cess after implementation of the goods and services tax (GST). Price hikes in the overall cigarette portfolio over the past nine months have been about 14 per cent. Those at 20-23 per cent in the 69-millimetre and 84-millimetre segments are primarily responsible