ITC, Godfrey Phillips Signal Margin Stability as Rs. 2,050 – Rs. 8,500 Excise Duty Is Passed to Consumers

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ITC shares and Godfrey Phillips shares moved higher and saw strong buying on February 18, Wednesday. Buying interest stayed strong, and the rally continued for the third straight day. The rise came after companies increased cigarette prices across several categories. Investors reacted to news of a sharp cigarette price hike across many brands.

ITC shares rose 1% to Rs. 329.95 during the session. The stock gained about 5% in the last three days. Godfrey Phillips shares jumped more than 11% to Rs. 2,297.70. The stock gained 14% in two days. VST Industries also moved higher and added 3%.

Excise Duty Hike Triggers Rally


The main reason behind the rally is the recent excise duty increase. The government raised excise duty on cigarettes from February 1, 2026. The new duty ranges from Rs. 2,050 to Rs. 8,500 per 1,000 sticks. The rate depends on the length of the cigarette. Longer sticks attract a higher tax.

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In January, cigarette stocks fell sharply after the duty hike announcement. Stocks dropped between 9% and 26%. Investors feared lower margins and weaker demand. That pressure has now eased.

Companies Raise Prices to Protect Margins


Companies responded with a strong cigarette price hike. Reports suggest that price increases fully covered the higher excise duty in premium brands. Companies kept price increases lower in cheaper segments. This move aims to protect sales volume while saving margins.

Brokerage estimates earlier showed EBIT could fall by 8% to 15%. Now, analysts expect the decline to stay near 2%. This change improved market confidence in ITC shares and Godfrey Phillips shares.

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For ITC, the 75 to 85 mm cigarette segment carries high exposure. This segment makes up about 16% of total volumes. Costs in this category could rise by 22% to 28% after the excise duty hike. Reports suggest price increases of Rs. 2 to Rs. 3 per stick in this segment.

Strong Results Support Sentiment


According to market reports, the 84 mm cigarette price increased to Rs. 24 from Rs. 17 earlier. The 64 mm cigarette moved to Rs. 7 from Rs. 5.9. Premium categories saw a full pass-through of tax. Lower-priced categories saw smaller hikes.

Strong quarterly results also supported the rally. Godfrey Phillips reported solid profit growth in the recent quarter. ITC’s cigarette business showed stable demand. These results reduced fear of volume loss.

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Market experts say the sector handled the excise duty shock well. The cigarette price hike helped protect profits. Investors now track sales trends in the coming months.

The recent move shows confidence returning to ITC stock, Godfrey Phillips shares, and VST Industries. The sector shows the ability to absorb tax shocks. 

The market believes the worst impact of the excise duty may already be priced in. The market now watches volume trends in the coming quarters.

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