ITC extends fall on heavy volumes; stock slips 12% in 3 days

Shares of ITC were trading lower for the third straight day, falling 8 per cent to Rs 161 on the BSE on Wednesday on heavy volumes. The stock of cigarette manufacturer has slipped 12 per cent in the past three trading days on reports that the Health Ministry has notified new health warnings for tobacco products. The counter has seen huge trading volume, with a combined 22.4 million equity shares changing hands on the NSE and BSE till 10:13 am.
In comparison, the S&P BSE Sensex was down 6.2 per cent during the same period.

The Union Health Ministry on Monday notified a new set of enhanced health warning to be printed on packets of all tobacco products. Tobacco products manufactured or imported or packaged on or after September 1, 2020 will have to display the first set of images while the second set of images will have to be displayed after Sept 1 next year, the ministry said in a statement, a PTI report suggested.

Analysts at Spark Capital expect ITC’s cigarette volume growth in March 2020 quarter to decline, impacted by both tax/price increases effected mid-quarter and also due to business disruptions for non-essential items during the lockdown period. Growth in the FMCG segment to remain in low to mid single-digit led by growth in foods segment, the brokerage firm said in results preview note.

Meanwhile, according to an Economic Times report, the government is seeking to raise around to Rs 22,000 crore by selling its entire stake in ITC and Axis Bank, one of the leading private sector lenders. The government holds stake in these companies through Specified Undertaking of the Unit Trust of India (SUUTI), which owns 7.94 per cent in ITC and 4.69 per cent in Axis Bank, as on March 31, 2020. The stock of Axis Bank slipped 5 per cent to Rs 368 on the BSE in intra-day trade today.