Companies associated with tobacco, alcohol and gambling are often called ‘Sin Stocks’. This name is given to these companies because their profit comes from human bad habits. Ethical investors avoid investing in such companies. Apart from this, governments also impose heavy taxes on these companies so that the consumption of the product related to them is reduced. It is known as ‘Sin Tax’.
In the July 2024 budget, Finance Minister Nirmala Sitharaman did not make any changes in ‘Sin Tax’. But this time, the budget presented on 1 February 2025 is expected to increase tax on tobacco products. This change will not only affect the profits of these companies, but can also have a profound impact on the prices of their shares.
Current tax structure on tobacco and alcohol
Currently, tobacco products are imposed on 28% GST and 16% NCCD (National Calamity Conference Duty). The World Health Organization (WHO) recommended that all tobacco products should have at least 75% tax. At the same time, VAT, custom duty and various taxes of state governments are included on alcohol, which overall reach about 80% of the price of liquor.
In addition, 30% flat tax is levied on online gaming and gambling. The purpose of all these is to increase revenue from the government as well as remove the public from these habits.
Possible ‘Sin Tax’ increase in budget 2025
Experts believe that this time tax can increase on tobacco products in the budget. If this happens, it will directly affect the sale and profit of these companies. In addition, their performance in their stock market may also have negative effects. Let’s know the current status of some major ‘Sin Stocks’ and possibilities for them.
ITC (ITC):
Current Price: ₹ 438
The ITC stock has recently been trading within a radius of ₹ 430- ₹ 450 after separating its hotel business. According to the technical analysis, this stock is taking support on 100-DMA (Daily Moving Average) at ₹ 435 and 20-MMA (Monthly Moving Average) at the level of ₹ 443. If it falls below ₹ 435, it can go to ₹ 397. It is possible to have a level of ₹ 373 if it goes down.
However, if the stock trades above ₹ 450- ₹ 455, then it can be likely to improve. But the short-term trend will remain negative until it crosses the level of ₹ 464.
Godfrey Phillips:
Current Price: ₹ 4,380
Godfrey Philips shares was at a high of ₹ 8,189 in September 2024. It has fallen 50% from there to ₹ 4,380. This stock is currently trading its 50-WMA (Weekly Moving Average) below ₹ 4,590.
If it breaks the level of ₹ 4,000, the stock may fall to ₹ 3,600. At the same time, it will show strength only when it crosses the level of ₹ 4,900 at the top.
VST Industries:
Current Price: ₹ 314
VST industries have been demonstrating for the last four months. This stock is trading below all its important moving averages. According to technical analysis, it can get strong support at the level of ₹ 295. If this level breaks, the stock may fall to ₹ 255. At the same time, upwards, it has to be crossed the level of ₹ 340, only then it can be expected.
United Breweries:
Current Price: ₹ 2,037
The stock of United Brevies has been trading in a limited range between ₹ 1,850- ₹ 2,180 for the last nine months. If it falls below ₹ 1,850, it can go up to ₹ 1,600. At the same time, if it crosses the level of ₹ 2,180, then it can reach ₹ 2,250. But at the moment it is in a state of stagnation.
Delta Corp:
Current Price: ₹ 100
Delta Corp’s stock has recently been performing weak. It is trading below its 200-mma of ₹ 110. If it breaks the level of ₹ 94 and ₹ 81, it can fall to ₹ 72. However, if it crosses the level of ₹ 117- ₹ 120, it can be likely to improve.