ITC shares fell 3% after the Group of Ministers on GST rate rationalisation proposed increasing the tax on products such as aerated beverages, cigarettes, and other tobacco-related items to 35%. The current rate on such products is 28% as of now. This decision could be part of a larger initiative to modify tax rates on specific items to improve revenue generation.
The GoM, headed by Bihar’s Deputy Chief Minister Samrat Choudhary, convened on Monday to finalize the suggested rate modifications. Alongside the hike for “sin goods,” changes to the GST structure for apparel and other items were also discussed.
Under the GST framework, necessary goods are either tax-exempt or subject to the lowest tax rate, whereas luxury and harmful products face higher taxation. Luxury items like automobiles and washing machines, along with demerit items such as soft drinks and tobacco products, are also subject to an additional cess on top of the maximum slab rate of 28%.
ITC’s performance in Q2
ITC reported a 3.1% on year increase in net profit for the second quarter of FY25 at Rs 5,078.3 crore against Rs 4,927 crore, in the same quarter last year. Its total revenue for the Q2 FY25 was Rs 19,327.8 crore, a growth of 16.8% on year from Rs 16,550 crore in the year-ago quarter. ITC’s cigarette business reported a gain of 7.3% YoY in net segment revenue.
ITC Vs Nifty 50
The stock of FMCG has fallen over 1% in the past five trading sessions. The stock has erased 3.2% of investors’ wealth in the previous month. However, it delivered a return of 9% in the last six months. From year to date, the stock of ITC has given a return of 0.24% and 3.33% in the last one year.
To compare, the benchmark index, Nifty 50 has fallen 1.2% in the last five trading sessions. The index has wiped out 3.25% in the last one month. However, the index has risen 9% in the last six months. It gave a return of 0.2% from year to date and over 3% in the last one year.
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