Why Are ITC and Godfrey Phillips Shares Plummeting to New Lows?
Synopsis
On January 1, a dramatic announcement from the government regarding a fresh excise duty on cigarettes sent major cigarette manufacturer shares spiraling downward. With ITC hitting a 52-week low, and Godfrey Phillips plummeting nearly 19%, the market is bracing for potential price hikes and diminished demand. What does this mean for the industry and consumers?
Key Takeaways
New excise duty on cigarettes set to raise prices.
ITC shares hit a 52-week low at Rs 362.70.
Godfrey Phillips shares fell nearly 19% during trading.
Excise duty ranges from Rs 2,050 to Rs 8,500 per thousand sticks.
GST on cigarettes will be 40% from next month.
Mumbai, Jan 1 (NationPress) Shares of prominent cigarette manufacturers witnessed a significant decline on Thursday after the government revealed plans to introduce a new excise duty on cigarettes starting next month. This decision is anticipated to elevate prices and adversely affect sales.
During the intra-day trading on Thursday, shares of ITC and Godfrey Phillips plummeted by as much as 19 percent.
As per a government directive, the new excise duty will be effective from February 1.
The duty is set between Rs 2,050 and Rs 8,500 per thousand cigarette sticks, depending on their length.
This increased tax is likely to render cigarettes more costly, which could hurt demand and impact the earnings of cigarette companies.
In the wake of the announcement, ITC shares dropped by up to 10 percent on the BSE, reaching a 52-week low of Rs 362.70.
The stock also faced pressure from a significant block deal reported during the trading session, adding to the selling momentum.
Over the past year, ITC shares have seen a decline of 17 percent, and they are down 9 percent in the last six months.
The company remains a key player in benchmark indices, boasting a market capitalization exceeding Rs 4.75 lakh crore.
Shares of Godfrey Phillips experienced an even sharper decline, tumbling almost 19 percent to hit a low of Rs 2,230.15 on the BSE.
Despite the steep drop on Thursday, the stock has appreciated nearly 49 percent over the past year.
The new excise duty on cigarettes will be imposed in addition to the existing goods and services tax. From next month, cigarettes, tobacco, and similar products will incur a GST rate of 40 percent.
This excise duty will replace the compensation cess that was previously levied on these items.
This change follows the approval of an amendment law by Parliament in December, which replaces the temporary levy on cigarette and tobacco products.
Point of View
It's crucial to observe the long-term impact of the government's decision on excise duties for the cigarette industry. While the immediate drop in share prices raises concerns for investors, this move could potentially lead to a decline in smoking rates in the country, aligning with public health goals. However, the economic repercussions for manufacturers and retailers cannot be overlooked. A balanced perspective is essential as we navigate these changes.
NationPress
20 Jun 2026
Frequently Asked Questions
What is the new excise duty on cigarettes?
The new excise duty ranges from Rs 2,050 to Rs 8,500 per thousand cigarette sticks, depending on their length.
When will the new excise duty take effect?
The new excise duty will come into effect on February 1.
How have the shares of ITC and Godfrey Phillips reacted?
Shares of ITC and Godfrey Phillips fell sharply, with ITC hitting a 52-week low and Godfrey Phillips plummeting nearly 19%.
What is the GST rate on cigarettes starting next month?
From next month, cigarettes, tobacco, and similar products will attract a GST rate of 40%.
Why is the government implementing this excise duty?
The excise duty aims to increase prices and potentially reduce smoking rates, aligning with public health objectives.
