ITC, Godfrey Phillips Surge Up To 11% On Reported Price Hikes After Excise Duty Increase

Cigarette company stocks rocketed in early trading on February 18, continuing their recent upward trend with price increases being reported in the major categories.

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Godfrey Phillips India surged by more than 11% and ITC also made a gain in its third consecutive session. The rally was a result of media reports that had indicated that the recent excise duty increment has seen the cigarette companies raise the price to cushion the changes.

Cigarette Stocks Extend Rally

ITC, Godfrey Phillips India and VST Industries shares were in the early trade, and their gains were also extended.

Godfrey Phillips India increased by more than 11% to ₹2297.70, which translates to 14% in two days. ITC increased 1% to ₹329.95, becoming its third gain in succession and totalling 5% in three days. The exchange data shows that VST Industries has added 3% in the session.

The rally comes against a backdrop of media reports of price increases by the manufacturers of cigarettes to counter the effects of the recent increase in excise duty. They reported that the price increases may restrain the anticipated reduction in the earnings before interest and tax (EBIT) by 2%, as opposed to the previously estimated 8 to 15%.

Excise Duty Impact And Pricing Measures

The increase in the excise duty, which came into effect on February 1, increased the taxes on cigarettes in certain categories. The new duty will be between ₹2,050 and ₹8,500 on 1000 sticks (based on the length of cigarettes), with bigger amounts charged on the longer cigarettes.

A report by NDTV Profit, based on the analysts at B&K Securities and InCred, indicated that ITC has increased the prices of some categories of cigarettes to reduce the effect of the increase in duty on its operating income. The effect of the increase in excise was a price increase of up to 60% at the real level.

In the case of ITC, the effect is higher on the 75-85 mm segment, which comprises 16% of the cigarette volumes. The expenses in this group may increase by 22-28%, which means that the prices will increase by ₹2-3 a stick in order to safeguard the margins. The prices of the brands like Gold Flake, Classic (Premium), were allegedly raised by 41%, Classic Connect (Slims) by 20%, and Gold Flake Superstar (Value) by almost 19%.

Market-Wide Developments

Cigarettes Stocks had fallen by 9 to 26% last month following the government's signal of a steep rise in excise duty at the onset of 2026, which has brought about concerns over margins and volumes. The recent rally shows that such counters have partially recovered after it was reported that they were being adjusted in price.