Cigarette prices: Why ITC, Godfrey Phillips shares rallied up to 7% today

Shares of cigarette makers including ITC Ltd and Godfrey Phillips India Ltd climbed up to 7 per cent in Wednesday's trade after a report suggested a couple of cigarette makers may revise cigarette prices by nearly 17 per cent from May 2026. The report citing channel checks, based on distributor conversations, quoted sources as saying that Goldflake Premium prices could rise to about Rs 135 a pack. This would be against Rs 115 a pack at present. Similar increases are likely across other value-end brands sold by Godfrey Phillips India and ITC, sources told NDTV Profit. 

Following the development, Godfrey Phillips shares climbed 7.42 per cent to hit a high of Rs 2,273 on BSE. By 2 pm, ITC shares were trading 3.63 per cent higher at Rs 315.50. VST Industries was down 0.44 per cent at Rs 259.55. 

To recall, from February 1, cigarettes, pan masala and other tobacco products came under a new, tougher tax regime, with the Centre introducing additional excise duties and a health and national security cess over and above the highest 40 per cent GST slab. The revised tax structure came into effect from February 1, commensurate price hikes were implemented from February 8-10 in a phased manner. JM Financial earlier this month suggested that mainstream king size filter tip of over 75mm saw significant price increase of Rs 7 per stick, which translated to 41 per cent hike, followed by the regular size segment of 66-70mm, which saw hike of Rs 2-2.5 per stick, which implied 20 per cent hike. The deluxe size (DSFT) cigarette of less than 65mm, also saw hike of Re 1 per stick, an increase of 10 per cent.

Now the dealer checks by NDTV Profit suggested that the overall cigarette volumes in in Maharashtra likely fell about 20 per cent in April, with news portal earlier reporting that the premium king size segment recorded the steepest decline.

For the March quarter, Nomura India expected IC's cigarette volume to decline 3.5 per cent, as Q4 volumes did not have the full impact of a sharp tax hike and price hike. 

"We note that the company has taken c.30 per cent price hike across its portfolio, which is lower than the 40 per cent-plus tax hike and can lead to 1HFY27F cigarette EBIT decline to be sharper," Nomura said earlier this month.