Tobacco Stocks: Godfrey Phillips, ITC Plummet After Excise Duty Hike | R Business Stock Update

The shares of cigarette manufacturers such as Godfrey Phillips to ITC extended their losses after budget day on February 2, 2025, falling 8% and 2.4%, respectively.

The VST Industries also felt the brunt of ₹22–25 hike in cigarette prices per pack of 10 sticks after the  implementation of higher excise duty from Sunday.

In January, the centre had imposed an excise duty on cigarettes with effect from February 01, translating into a higher pocket pinch for consumer looking to buy the same pack of cigarettes.

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The Dalal street is concerned that higher cigarette prices will impact sales and, in turn, the profitability of the companies.

ITC generated 47% of its consolidated revenue from the cigarette segment during the quarter ending September.

As per a PTI report, premium cigarettes of 76 mm length will now cost between ₹50 and ₹55 more per pack of 10 sticks, varying basis the cigarette label.

A packet of Wills Navy Cut (76 mm), a popular mid-sized cigarette produced by ITC, previously priced at ₹95 per pack (10 sticks), is now expected to cost around ₹120 per pack, the report added.

Other well-known ITC brands of 84 mm length, such as Gold Flake Lights, Wills Classic, and Wills Classic Milds, which were priced at ₹170 per pack (10 sticks), are now expected to cost between ₹220-₹225 per pack.

All three stocks down by up to 26% in January

These stocks have remained under pressure since the policy change, with ITC share price closing January with a steep 20% fall, while Godfrey Phillips and VST Industries shares shed 26.3% and 9%, respectively, over the same period.