Godfrey Phillips and ITC Limited Shares Rally as Cigarette Stocks Find Fresh Momentum | Stock Market Today

Market Performance: Cigarette Stocks Bounce Back Sharply

Cigarette stocks were back in focus on February 6, with Godfrey Phillips and ITC Limited leading the rally. After weeks of pressure, both stocks moved higher as investors digested recent developments around cigarette taxation and company fundamentals.

• Godfrey Phillips India surged over 11%
• ITC Limited climbed nearly 5%
• The Nifty FMCG index emerged as the top-performing sector for the day
• ITC featured among the top gainers on the Nifty

The move marked the strongest levels for these stocks in over a month, following a sharp correction seen in December.

Main News: Why Godfrey Phillips and ITC Limited Shares Rose?

The rebound comes after earlier concerns around higher cigarette taxation had already been priced into the stocks.

In December, Parliament approved the Central Excise (Amendment) Bill, 2025, paving the way for a steep increase in duties on cigarettes and tobacco products. That announcement had triggered a swift sell-off across cigarette stocks.

However, by early February, the market appeared to have adjusted.

Here’s the key tax update investors are factoring in:

• Excise duty introduced over and above 40% GST
• New excise structure:
  • Rs 2,050 to Rs 8,500 per 1,000 cigarette sticks
  • Rate varies based on cigarette length
• The revised duty came into effect from February 1

With clarity now in place and no new surprises on taxation, value buying returned to cigarette stocks — especially market leaders like Godfrey Phillips and ITC Limited.

Godfrey Phillips India: Financial Performance in Focus

Godfrey Phillips India’s stock strength also reflected its December quarter FY26 performance, which showed steady growth across key parameters.

Q3 FY26 Financial Snapshot (Consolidated):

• Net Profit:
  • Rs 343.29 crore, up 8.7% year-on-year
  • Previous year: Rs 315.84 crore
• Revenue from Operations:
  • Rs 2,189.93 crore, up 15.68%
  • Previous year: Rs 1,893.08 crore
• Total Expenses:
  • Rs 1,843.96 crore, up 18%
• Total Income (including other income):
  • Rs 2,234.51 crore, up 15.2%

The company operates well-known cigarette brands such as Four Square, Red and White, Cavanders, Tipper, and North Pole. It also manufactures and distributes Marlboro in India under a licensing agreement.

The timing of the stock’s rally also coincided with anticipation around results from its promoter entity, Philip Morris.

ITC Limited: FMCG Heavyweight Regains Strength

ITC Limited played a key role in lifting the Nifty FMCG index, with its shares rising close to 5% during the session.

The move followed steady operating numbers for the December quarter.

ITC Q3 Highlights:

• Net Profit:
  • Rs 5,018 crore, marginal year-on-year increase
• Revenue from Operations:
  • Rs 21,707 crore
  • Previous year: Rs 20,350 crore
• Cigarettes Business Revenue:
  • Growth of 8% in Q3
• Consumer Goods Segment Revenue:
  • Growth of 11%

The cigarettes segment remains ITC’s largest contributor, while its FMCG portfolio includes household names like Aashirvaad, Sunfeast, and Yippee.

Rising Costs and Stable Volumes

While cigarette volumes in India have held steady, ITC continues to face pressure from rising raw material costs.

• Leaf tobacco prices have increased in recent quarters
• Export demand for tobacco has picked up
• Higher input costs have weighed on overall profitability

Despite these headwinds, the stability in volumes and consistent revenue growth have helped sustain investor interest in ITC Limited.

Summary: What This Means for Godfrey Phillips and ITC Limited?

The rally in Godfrey Phillips and ITC Limited reflects a market that has largely absorbed the impact of higher cigarette duties.

• Tax-related uncertainty is now clearer
• Both companies reported stable to improving financial performance
• FMCG and cigarette segments showed resilience
• Value buying returned after sharp corrections in December

For now, cigarette stocks appear to be stabilising as investors focus more on earnings visibility and less on regulatory shock. The February 6 session underlined that shift clearly, with Godfrey Phillips and ITC Limited once again taking centre stage in the market narrative.

Source: Moneycontrol