Stocks of ITC, Godfrey Phillips Soar Following Reports of Cigarette Price Rise In May

Shares of cigarette manufacturers ITC and Godfrey Phillips rose substantially on April 29, following news that both firms were planning to hike their cigarette prices by 17% from May 2026 onwards.

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The shares of ITC jumped by around 4%, while those of Godfrey Phillips shot up by 6.5%. The rally also pushed the Nifty FMCG index around 2% higher, with ITC emerging among the top contributors to the gains.

According to a report by NDTV Profit, channel checks indicated that the proposed price increase may extend beyond premium cigarette products and could also cover value-end brands sold by both companies.

Premium Cigarette Prices May Increase

The report cited distributor feedback showing that ITC’s Goldflake Premium pack price could increase to nearly ₹135 from ₹115 starting May 2026.

The awaited revision will follow a hike in excise duty on cigarettes and tobacco products by the government this year.

The Finance Ministry introduced a new excise duty rate in February 2026 in response to the enactment of the Central Excise (Amendment) Bill, 2025, in the Parliament.

According to the new system, excise duty on cigarettes is set at ₹2,050 to ₹8,500 for 1,000 cigarettes based on the size of the cigarette. This tax is applied alongside the current Goods and Services Tax (GST) of 40% on cigarettes.

Higher Duties Raise Industry Costs

According to ICICI Securities, the revised excise duty structure resulted in a 22% to 28% increase in overall costs for cigarettes in the 75 mm to 85 mm category.

The brokerage had earlier noted that cigarettes longer than 75 mm account for nearly 16% of ITC’s total cigarette volumes.

The report also estimated that price increases of ₹2 to ₹3 per stick may be required to offset the impact of the higher tax burden.

FMCG Stocks In Focus

The latest report on possible price hikes led to renewed investor interest in tobacco and FMCG stocks during Wednesday’s session.

Cigarette manufacturers have used price revisions from time to time to deal with increases in taxation and other costs.

The industry is currently under close scrutiny from investors owing to recent developments related to excise duties and taxation policy statements issued by the government in the year's beginning.

The price hike, if effected, will be one of the important revisions of cigarette prices after the implementation of the recent excise duty change in February 2026