- Cigarette sales in Maharashtra dropped around 20% in April after excise duty hike
- Government raised excise duty on cigarettes by 30-40% effective February 1, 2026
- King Size cigarette prices rose from Rs 20 to Rs 25-28 per stick post-duty hike
India's cigarette market has been navigating rough waters following the government's excise duty hike in February, which led cigarette manufacturers to increase prices significantly. This has led to a fall in cigarette sales, with dealer checks conducted by NDTV Profit in Maharashtra suggesting overall volumes likely dropped around 20% in April, with the premium king size segment taking the largest hit.
The government hiked excise duty on cigarettes by 30-40%, effective February 1, 2026, which triggered a sharp increase in every category of cigarettes. While lower-priced cigarettes saw relatively lower hikes, the premium cigarette segment witnessed a sharp jump in prices, with the King Size category bearing the brunt.
In the King Size segment, per-stick prices are rising from Rs 20 to Rs 25-28. Dealers say the price shock has prompted consumers to begin downtrading, even as the overall smoker base has remained largely unchanged.
King-size cigarettes — which include ITC's Classic and Gold Flake Kings, and Godfrey Phillips' Marlboro — account for a disproportionate share of the volume decline.
The segment is also the most margin-accretive for both companies. King-size cigarettes contribute over 30% of revenue for both ITC and Godfrey Phillips, making the volume erosion in this category particularly consequential for earnings.
Analysts tracking the sector say cigarette margins could be hit by up to 800 basis points in Q1 FY27, depending on the extent of volume decline and the shift in product mix toward lower-priced alternatives. For context, cigarette margins are as high as 70% for ITC,.
Stocks in focus are ITC and Godfrey Phillips, both of which derive significant revenue from the king-size segment. ITC declined to comment on the findings. NDTV Profit is awaiting a response from Godfrey Phillips.
ALSO READ: ITC Banks On Shorter-Length Cigarettes Amid Price Hikes — Check Morgan Stanley's Target Price
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