Diversified conglomerate ITC has raised cigarette prices by an average 15% across brands on the back of a sharp rise in excise duty on tobacco products in the budget 2015-16, analysts said.
Finance minister Arun Jaitley had proposed an excise duty hike of 25% on cigarettes up to 65mm in length and 15% on cigarettes over 65mm.
A loose cigarette costing Rs 10 will now cost Rs 11-12. A 20-cigarette pack of ITC Classic, which was earlier priced at Rs 190 will cost Rs 218. Prices of its other brands are also being raised.
ITC officials refused to comment on the price hike.
Several brokerages had already downgraded ITC shares, saying the duty rise would put pressure on ITC's volumes. "We model for a 6-7% drop in cigarette volumes in 2015-16 on the heels of estimated 8% decline in 2014-15 volumes," Gaurang Kakkad and Premal Kamdar of Religare Institutional Research had said.