Excise duty impact: ITC shares slide to new one-year low, Godfrey Phillips continues decline

Cigarette stocks such as ITC Ltd and Godfrey Phillips India Ltd extended their decline in Friday's session following the Centre's notification related to the Central Excise (Amendment) Bill, 2025. ITC shares slipped 5.11 per cent to a fresh one-year low of Rs 345.35, while Godfrey Phillips India fell 4.58 per cent to a day's low of Rs 2,184.60.

The selling pressure followed the government's announcement that excise-like levies on cigarettes and other tobacco products will apply over and above the existing Goods and Services Tax (GST). Under the revised framework, the earlier provisional levy structure is being replaced with a more formalised and stringent tax regime for the industry.

Currently, cigarettes in India attract a total tax incidence of up to about 53 per cent of the retail price, including 28 per cent GST and size-based levies. This remains well below the World Health Organisation's recommended 75 per cent tax share on tobacco products.

Brokerage commentary on ITC remained cautious. PL Capital maintained a 'Reduce' stance, noting that the revised excise duty could raise cigarette prices by 23–50 per cent and impact volumes by around 12.5 per cent in FY27.

"Although benefits of lower leaf tobacco prices and some price hikes will improve margins, overall profitability will suffer in medium term. Despite expected uptick in profitability in FMCG and Paperboard, we now expect ITC to post an EPS CAGR of only 4.5 per cent over FY26-28. We cut SOTP based target price to Rs 348 (based on September 27, Rs 528 earlier) and cut the rating to 'Reduce'," PL Capital said.

Emkay Global also downgraded ITC to 'Reduce' from 'Add', citing pressure on the near-to-medium-term outlook due to the proposed excise duty rates. The brokerage lowered its target price to Rs 350 for December 2026 from Rs 475 for September 2026, while cutting earnings estimates to reflect the impact of higher taxes.

On Godfrey Phillips India, Jigar S Patel, Senior Manager – Technical Research at Anand Rathi, highlighted key levels from a technical perspective. "Support will be at Rs 2,100 and resistance at Rs 2,650. A decisive move above Rs 2,650 level may trigger a further upside of Rs 2,800. The expected trading range will be between Rs 2,000 and Rs 2,800 for the short term," he said.