Kothari Products clock 10% rise

Kothari products was locked at 10 per cent upper deck at Rs 205.70 on the Bombay Stock Exchange (BSE) after the Supreme Court (SC) on Monday...

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Kothari products was locked at 10 per cent upper deck at Rs 205.70 on the Bombay Stock Exchange (BSE) after the Supreme Court (SC) on Monday announced that the state governments cannot ban gutka and pan masala. A total of 2,561 shares changed hands on the BSE.

After opening with a positive gap of Rs 192.45, the stock hit 10 per cent upper deck after the SC announced its judgement. On the National Stock Exchange (NSE), the stock ended higher at Rs 205.15, which recorded volumes of 5,750 shares.

An analyst from a foreign brokerage said the SC decision was positive for pan masala and gutka manufacturer like Kothari Products, which will improve sentiments in the stocks as well as its valuations. The SC held that the power to impose a total ban on manufacturing and sale of any food or consumable item rested entirely with the central government and hence the state governments could not come up with the notifications. However, the court said the states have only a ‘‘transitory’’ power to ban the products for a short period.

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On the other hand, cigarette stocks ITC, VST Industries and Godfrey Philips ended in the red in the range of 0.13 per cent to 1.82 per cent on the BSE on expectation that the revenues of cigarette companies would decline as the tobacco chewers who had resorted to smoking post state governments’ ban may again return to tobacco chewing.

However, analysts said there was no positive impact on the revenues of cigarette makers after the state government imposed the ban on pan masala and gutka, as tobacco chewers shifted to low-end products. Hence, the SC decision would now have no impact on cigarette manufacturers. Earlier, there were fears that the ban on these products would be passed on to other states, after Maharashtra and Andhra Pradesh government imposed a ban on sale of pan masala and gutka in their states. But now the SC decision has come as a major relief to the manufacturers, analysts said.