ITC, Godfrey Phillips And Other Cigarette Stocks Under Pressure Today On Higher Excise Duties

Cigarette stocks are trading under pressure in today's trade. ITC Ltd's shares are plunging nearly 5%, Godfrey Phillips India Ltd and VST Industries Ltd are down over 2%. The downtick is because starting February 1, smokers will have to shell out more for their puff.

Cigarettes are set to attract a tax of 40%, which serves as a major blow for ITC, where the cigarette division serves as a key revenue driver.

The Finance Ministry, in a late Wednesday order, announced a steep hike in excise duty on cigarettes—ranging from Rs 2,050 to Rs 8,500 per thousand sticks, depending on the product's length.

Post the announcement, ITC shares tumbled nearly 6% on the NSE, hitting their lowest level in almost three years, while Godfrey Phillips slid to an eight-month low.

Adding to the turbulence, a massive block deal in ITC shares intensified selling pressure. Around 4.03 crore shares—valued at Rs 1,614.5 crore—changed hands at Rs 400 apiece, according to media reports.

In the wake of ITC's sharp fall on Thursday, a slew of brokerages have cut target price on the FMCG counter today.

The new excise levy will come on top of the existing 40% GST and will replace the compensation cess currently imposed on tobacco products. This follows Parliament's passage of the Central Excise (Amendment) Bill 2025 in December, which aimed to overhaul the tax structure for so-called “sin goods.”

Despite the hike, India's cigarette tax burden remains well below global health standards. As per a Reuters report, taxes account for roughly 53% of retail cigarette prices in India—far short of the World Health Organization's recommended 75% threshold to curb consumption.

Shares of Godfrey Phillips are currently trading 2.22% lower at Rs 2,239.70 apiece, paring their weekly low of 10.4%. ITC stock price is down 4.38% to Rs 347.90 per share, while VST Industries' share price has taken a hit of over 2.35% to trade at Rs 249.50 apiece.