‘Positive’ tax

India’s new goods and services tax (GST) is a positive for cigarette companies, according to Sanjay Manyal, equity research analyst at ICICI Securities.

“Prices should go down by at least 5-7 percent or maybe even more, which probably will benefit the companies and would really help in aiding growth at least for FY18,” he told India’s Economic Times.

Manyal said cigarette consumption is not completely price inelastic as excise tax hikes almost every year have led to volumes declining by double digits.

If there is a price decline, he added, there will be some boost. Manyal said he expects market leader ITC to benefit most.