Ban on e-cigarettes unlikely to hinder ITC's prospects; stock falls 1.2%

Down-trading by customers and overall slowdown are near-term challenges for the cigarettes leader

Finance Minister Nirmala Sitharaman’s announcement on the complete banning of e-cigarettes, including any other alternative smoking device, is unlikely to significantly affect ITC. 

The stock, which initially reacted positively on Wednesday, fell 1.2 per cent on Thursday to Rs 236.75, along with the benchmark indices.

Though ITC has its own e-cigarette variant — Eon — its revenue contribution is minuscule (not even 0.2 per cent, estimate analysts) and the chances of its contribution rising in the near term was almost negligible.

“E-cigarette is an expensive format that has not actually done well, even in developed nations, in terms of acceptance.