Shares of cigarette manufacturers ITC, Godfrey Phillips India and VST Industries surged up to 11% on Wednesday, February 18, extending their winning run amid reports of price hikes.
Several media reports stated that these companies have raised prices to offset the impact of the excise duty increase. The price hikes are expected to limit the EBIT decline to 2% from expectations of 8-15% earlier.
ITC share price gained for the third day in a row, rising 1% to ₹329.95 today and 5% in the three days, including today’s gain. Meanwhile, Godfrey Phillips shares rallied over 11% to ₹2,297.70, taking its two-day gain to 14%. Another cigarette manufacturer, VST Industries, rose 3% in trade today.
Last month, cigarette manufacturers declined 9%–26% after the government’s sharp increase in excise duty at the beginning of 2026 raised concerns about margins and volumes.
A report by NDTV Profitquoting analysts at B&K Securities and InCred, stated that ITC has sharply raised the prices for its cigarettes across some categories to negate the impact of the excise duty hike on its operating income.
The excise hike, effective February 1, resulted in a price increase of up to 60% in real terms. The revised duty ranges from ₹₹2,050 to ₹8,500 per 1,000 sticks, based on cigarette length, with higher taxes on longer sticks.
For ITC, the impact is most pronounced in the 75-85 mm segment, which accounts for 16% of cigarette volumes. Costs in this category could rise by 22-28%, implying potential price hikes of 22-3 per stick to protect margins.
The report by NDTV Profit states that prices for Gold Flake and Classic (Premium) have been hiked by 41%, Classic Connect (Slims) by 20%, and Gold Flake Superstar (Value) by nearly 19%
