ITC, Godfrey Phillips And Other Cigarette Stocks Slide As Prices Likely To Rise On New Duties
Following the announcement, ITC shares fell as much as 6% on the NSE to declined to their lowest level in nearly three years. Godfrey Phillips was down to its eight-month low.
Shares of cigarette makers ITC and Godfrey Phillips plunged by up to 10% in Thursday’s session after the government imposed an excise duty on cigarettes, effective next month.
According to a Finance Ministry order issued late on Wednesday, the excise duty will range between Rs 2,050 and Rs 8,500 per thousand sticks, depending on product length, from February 1.
The move is likely to push up cigarette prices, which could hurt sales for ITC and other cigarette manufacturers.
Following the announcement, ITC shares fell as much as 6% on the NSE to declined to their lowest level in nearly three years. Godfrey Phillips was down to its eight-month low.
In addition, a block deal in ITC shares added to the pressure on the stock, according to multiple media reports. About 4.03 crore shares (0.31% equity) worth Rs 1,614.5 crore changed hands at Rs 400 per share.
The new levies on tobacco will be over and above the GST rate and will replace the compensation cess currently applicable on such sin goods, PTI reported.
In December, Parliament passed the Central Excise (Amendment) Bill 2025, replacing a temporary levy on cigarettes and tobacco products. From next month, cigarettes, tobacco and related products will attract a goods and services tax (GST) rate of 40%.
According to a Reuters report, total taxes on cigarettes in India currently account for about 53% of retail prices, which is significantly below the World Health Organisation benchmark of 75% intended to discourage consumption.
Shares of Godfrey Phillips are currently trading 10.12% lower at Rs 2,482.80 apiece, paring their day's low pf 10.4%. ITC stock price is down 6.76% to Rs 375.75 per share, while VST Industries' share price has taken a hit of over 2% to trade at Rs 252.05 apiece. This is in comparison to the benchmark Nifty 50 trading at a 0.16% advance.
