ITC, Cigarette Stocks Rise Up To 13% On Price Hikes, Block Deals, And Earnings

On February 6, shares of cigarette makers rose sharply, ending a recent losing streak. This was due to higher cigarette prices, block deals, recent earnings, and buying based on valuation, according to data from the National Stock Exchange and company disclosures.

ITC shares gained nearly 6% to ₹327.70, while Godfrey Phillips India shares surged close to 13% to ₹2,229.50 during intraday trade. The move came after cigarette stocks had underperformed in January following the announcement of higher excise duties on tobacco products.

Block Deals And Valuation-Led Buying Support Stocks

According to data from the exchange, ITC saw a lot of block deals during the session, with more than 1.3 crore shares changing hands at an average price of ₹321.80. This represented a premium of around 4% over the previous closing price of ₹310.20.

Market data showed that cigarette stocks had declined sharply in January. ITC, Godfrey Phillips India, and VST Industries fell 20.1%, 26.3%, and 8.9%, respectively, during the month, following concerns over higher taxation on cigarettes.

Cigarette Prices Rise After New Excise Duty Regime

Cigarette prices increased after the new excise duty regime came into effect on February 1, following Parliament’s approval of the Central Excise (Amendment) Bill, 2025, in December, according to notifications issued by the Ministry of Finance.

The finance ministry notified excise duties ranging from ₹2,050 to ₹8,500 per 1,000 cigarette sticks, depending on length, in addition to a 40% Goods and Services Tax. According to ICICI Securities, the revised duty structure translates into a 22–28% increase in overall costs for cigarettes measuring 75–85 mm.

Distributors told Reuters that premium cigarettes of 76 mm length are now priced ₹50–55 higher per pack of 10 sticks, depending on the brand. Cigarette manufacturers have not yet formally announced revised maximum retail prices.

Recent Earnings Provide Support

ITC reported a 6.4% year-on-year rise in consolidated net profit to ₹5,087.87 crore for the October–December quarter of FY26, compared with ₹4,781.90 crore in the corresponding quarter last year, according to its stock exchange filing. Revenue from operations increased 6.66% to ₹21,706.64 crore during the quarter.

Godfrey Phillips India reported a consolidated net profit of ₹343.29 crore for Q3 FY26, up 9% year-on-year from ₹315.85 crore in Q3 FY25. Revenue from operations rose around 16% year-on-year to ₹2,189.93 crore, according to the company’s filing.

The renewed buying interest lifted cigarette stocks on February 6, reversing part of the losses seen after the excise duty hike announcement earlier this year.