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ITC rallies on cigarette price hike

Shares of India's largest cigarette maker ITC Ltd were over 2 per cent higher on Tuesday driven by the company's recent price hike in two brands, analysts said.

In afternoon trade, shares of ITC were 2.21 per cent higher at Rs 866.45, off Rs 872, while the benchmark Sensex was 0.85 per cent up.

The retail price of Gold Flake regular filter was raised 3.33 per cent to Rs 15.50 for a pack of 10, while that of Scissors was hiked 11.11 per cent to Rs 10 last week.

Rajat Sabharwal, an analyst with Kotak Securities, said the price changes would boost profits over the longer term, but could hit volumes in the near-term.

He said the price increase is likely to add nearly Rs 1 billion to ITC's net profit in 2001-02 (April-March).

The company had reported a net profit of Rs 7.9 billion on sales of Rs 38.2 billion in the year March 31, 2000.

The firm is a tobacco and leisure conglomerate and is 31.7 per cent owned by British American Tobacco Plc.

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