ITC share price todayThe decline came after the news break of a committee set up by the Government of India to finalize the taxation policy for tobacco. ITC shares opened with today’s fall ₹1.15 per share and went to intraday low ₹248.70 on NSE. However, stock market experts believe that instead of panicking about this fall in ITC shares, this fall should be seen as a buying opportunity.
According to stock market experts, if the tobacco taxation policy is announced, ITC and other similar companies will come out of the pressure of increasing taxation in every year’s budget. Hence, the Indian government’s move is a positive development for ITC and other tobacco companies and should buy on the current downside for the long term.
Speaking on the reason for the fall in ITC share price; Ravi Singhal, Vice Chairman, GCL Securities said, “ITC shares declined today after news of the formation of a committee by the Government of India to finalize tobacco policy. But, it is good news for tobacco companies as tobacco policy Regular tax will eliminate any possibility of increase.Year after tobacco policy in the Union Budget, tobacco companies will come to know about the taxes levied on them, which is not there these days.So this is the reason for the stock market investors. This is a great opportunity to shop in the fall.”
Green Portfolio Analyst Sriram Ramdas said, “India is looking to step up its compliance with the R component of WHO’s MPOWER plan, which is to raise taxes for tobacco. A major part of ITC’s cash flow comes from their tobacco business. But there is something to keep in mind. Keep in mind that the cigarette business is very sticky, elasticity is low, and tobacco companies are able to pass the cost on to the consumer very easily. We are able to meet the increased cost in price which leads to slightly better margins.”
Throwing light on the fundamentals of ITC Shares; Sonam Srivastava, Founder, Wright Research said, “ITC stock which has been bullish for the past one month after breaking its long-term channel price of 200-220, up 20 per cent in a month posted a decline of 5 per cent in early trade today. The decline can be attributed to several factors. First, while analysts expect FMCG Q2 earnings to be strong, margins could be under pressure, and some believe that for ITC Q2 Earnings may decline slightly year-on-year.Also, the Union Ministry of Health and Family Welfare has constituted an expert panel to review the taxation policy for tobacco products.ITC being the primary business A higher tobacco tax will affect sales and the bottom line for ITC, and it could scare the market against it.”
Ravi Singhal of GCL Securities gives a buy on downside strategy for stock market investors saying, “One can buy counter to target 6 to 9 months at current levels. ₹maintain stop loss at 320 ₹227 per share level.”
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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