March 16 (Bloomberg) -- ITC Ltd., India’s largest cigarette maker, climbed to its highest in at least 21 years in Mumbai trading after the government proposed an increase in excise tax on fewer types of cigarettes than speculated.
ITC rose 3.5 percent to 216.15 rupees at the close in Mumbai, the highest price since at least January 1991, according to data compiled by Bloomberg. The stock was the biggest gainer on the 30-company BSE India Sensitive Index, which fell 1.2 percent. Godfrey Phillips India Ltd., India’s second-largest cigarette maker, added 3 percent to 3,092 rupees.
The government will levy a 10 percent tax in addition to the current duty on filter and non-filter cigarettes of more than 65 millimeters (2.6 inches) length, Finance Minister Pranab Mukherjee said in his budget speech in New Delhi today. The tax will be added on an ad valorem basis. The additional ad valorem levy will be charged on 50 percent of the retail sale price of a packet of cigarettes, he said.
“Market had factored a hike in excise duty on all types of cigarettes, which did not happen,” said Savio Shetty, an analyst with Prabhudas Lilladher Pvt. in Mumbai. “That is a relief.”
Kolkata-based ITC sells cigarette brands such as Wills and Gold Flake.
Some Indian states raised local taxes last year, which hurt volume of sales for ITC after the company raised prices to counter the increases.
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