Share price of ITC, Godfrey Phillips to be in focus today. Here’s why

Stock markets have been volatile in recent trading sessions, but they started the week on a positive note, ending higher on Monday despite mixed global cues.
Shares of FMCG giants ITC and Godfrey Phillips are expected to be closely watched today following the latest meeting of the Group of Ministers (GoM) on GST rate rationalisation.
The GoM, chaired by Bihar Deputy Chief Minister Samrat Choudhary, met on Monday to finalise proposed adjustments to GST rates. Among the key discussions was a proposal to increase the tax on ‘sin goods,’ which includes cigarettes, tobacco products, and aerated beverages.
The group has recommended raising the GST rate on these products from 28% to 35%, reported by news agency PTI.
In total, the GoM has proposed tax changes for 148 items, spanning various categories, including apparel and luxury goods. The final decision on these recommendations will be made by the GST Council, which is set to meet on December 21, 2024. The council is chaired by the Union Finance Minister and includes state finance ministers.
The GoM has suggested retaining the current four-tier tax structure of 5%, 12%, 18%, and 28%, while adding a new 35% rate for specific luxury and demerit goods. Under the GST system:
Essential goods are either exempt or taxed at the lowest slab.
Luxury and demerit goods attract higher rates, with additional cess levied on items like aerated beverages and tobacco products.
According to a GoM official quoted by PTI, “The GoM has agreed to propose a special rate of 35% on tobacco and related products and aerated beverages.”
These recommendations are expected to help the GST Council determine whether further rationalisation of rates is needed. The council may also extend the GoM’s mandate for periodic reviews of the GST structure.
Shares of ITC and Godfrey Phillips, which derive a huge portion of their revenue from the tobacco and cigarette business, are likely to see movement based on investor reactions to these proposed changes.
ITC: As one of India’s largest cigarette manufacturers, ITC may face increased costs and potential shifts in demand if higher GST rates are implemented. The company’s non-tobacco FMCG and hotel businesses could help cushion the impact.
Godfrey Phillips: Known for its strong presence in the cigarette market, Godfrey Phillips might also experience volatility as the market digests the news of potential tax hikes.
In addition to ITC and Godfrey Phillips, other stocks like Adani Power, Wipro, Swiggy, Tata Power, and BPCL are expected to remain in focus due to various developments.