After weeks of muted performance, cigarette stocks found their footing again. On February 6, shares across the sector moved sharply higher, driven by fresh buying interest and a mix of price, volume, and results-based triggers already in play.
The move came after a period of heavy selling following the excise duty hike announcement earlier this year. What we saw today was not random. It was a reaction to developments investors were closely tracking.
Market Performance: Cigarette Stocks Jump Back Into Action
The broader cigarette pack traded firm through the session.
- ITC shares rose nearly 6%, touching ₹327.7
- Godfrey Phillips India surged almost 13% to ₹2,229.50
- The rally came after multiple sessions of underperformance
This sharp rebound snapped recent losing streaks and brought cigarette stocks back into focus.
Main News: What Sparked the Sudden Buying?
The renewed interest was driven by a combination of price actions, trading activity, and recent financial performance.
Block Deals Lifted Sentiment
ITC witnessed significant block deal activity during the session.
- Over 1.3 crore shares changed hands through block deals
- The average transaction price stood at ₹321.80 per share
- This was about a 4% premium over the previous close of ₹310.2
Such deals often act as a confidence signal for the broader market.
Value Buying After Sharp Correction
Before today’s rally, cigarette stocks had taken a clear hit in January.
- ITC fell 20.1%
- Godfrey Phillips India dropped 26.3%
- VST Industries declined 8.9%
Today’s move reflects buying interest after these sharp corrections.
Price Hikes Hit Store Shelves
Cigarette prices have already moved up following changes in the excise duty structure.
- A pack of 10 sticks now costs ₹22–55 more than earlier
- Prices vary based on brand and cigarette length
- Premium cigarette packs are now quoted ₹50–55 higher in several cases
The price revisions came after the new excise duty regime became effective from February 1.
Excise Duty Change: The Cost Trigger Behind It All
The government approved the Central Excise (Amendment) Bill, 2025 in December, paving the way for higher duties on cigarettes and tobacco products.
Key points from the duty change:
- Excise duty imposed over and above 40% GST
- Duty rates range between ₹2,050 and ₹8,500 per 1,000 sticks
- Rates vary based on cigarette length
- The change replaced a temporary levy with a structured duty framework
This resulted in a 22–28% increase in overall costs for cigarettes in the 75–85 mm category.
Company Details: Earnings Added Support
ITC Financials
ITC reported steady numbers for the October–December FY26 quarter.
- Net profit rose 6.4% YoY to ₹5,087.87 crore
- Revenue from operations increased 6.66% YoY to ₹21,706.64 crore
Godfrey Phillips India Financials
Godfrey Phillips also posted growth in its latest quarter.
- Consolidated net profit stood at ₹343.29 crore, up 9% YoY
- Revenue from operations rose around 16% YoY to ₹2,189.93 crore
The company operates cigarette brands such as Four Square, Red and White, Cavanders, Tipper, and North Pole, and manufactures Marlboro in India under a licensing arrangement.
Summary: Why Cigarette Stocks Moved Today?
Cigarette stocks rallied sharply due to factors already visible on the ground.
- Strong block deal activity
- Value buying after steep January declines
- Visible price hikes at retail level
- Recent quarterly earnings showing steady growth
Together, these elements helped revive sentiment across cigarette makers, pushing stocks like ITC and Godfrey Phillips India higher by up to 13% in a single session.
The move highlights how quickly sentiment can shift when pricing changes and financial performance start aligning on the ground.
Source: Moneycontrol
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