Shares of THIS company open with gap up even as ITC, other stocks fall | Here’s why

The picture is also clear on the working capital front. Fast GST refunds, no cess hold-ups, and relatively predictable export receipts support the company's cash flow and ROCE.

Following the government’s announcement of higher taxes on cigarettes, shares of cigarette and tobacco product manufacturers have taken a significant hit. However, today we’ll tell you about one company that will be neutrally or positively impacted by this increase in taxes. The company we’re talking about is Elitecon International Ltd. This company will not be affected by the increased tax because its business model is entirely export-based.

Tobacco exports are subject to zero GST. Exports are considered zero-rated under GST, and Elitecon International operates under the LUT and refund mechanisms. This means that the increase in GST rates on cigarettes and tobacco does not directly impact the company’s revenue or margins.

The new excise duties and cesses apply only to domestic consumption, not export shipments. While domestic cigarette companies will bear the burden of increased taxes, exporters like Elitecon are completely exempt.

Brokerages and industry trackers believe that the increase in taxes could reduce cigarette demand in the domestic market. This could shift some of the tobacco leaf and processing capacity toward exports. This will benefit companies already focused on foreign markets. Improved availability and more competitive prices could create opportunities for exporters.

There are also signs of relief on the input cost front. Raw tobacco prices may soften due to sluggish domestic demand. This is expected to support export margins. This is considered a structural advantage for Elitecon.

The picture is also clear on the working capital front. Fast GST refunds, no cess hold-ups, and relatively predictable export receipts support the company’s cash flow and ROCE.

Meanwhile, Elitecon International opened up a gap with a gain of 2.4 per cent at Rs 104.90 against the previous close of Rs 102.44.