ITC, Godfrey Phillips Share Price Rebound: What’s Driving Cigarette Stocks in the Stock Market Today?

The stock market today saw renewed action in cigarette stocks. After a sharp correction earlier this year, ITC and Godfrey Phillips share price have made a steady comeback.

The reason is simple. Pricing power.

A steep excise duty hike had shaken the sector at the start of 2026. Stocks corrected sharply. But now, with price revisions being rolled out, the mood has shifted.

Let’s break it down clearly.

Market Performance: ITC, Godfrey Phillips Share Price Recover Sharply

Cigarette stocks were under pressure in January after the government announced a steep excise duty hike effective February 1.

But February has told a different story.

Here’s how the recovery looks:

• ITC shares have rebounded 7% from their February low
• The stock had earlier fallen 20% in January
• Godfrey Phillips share price has surged 25% from its February low
• It had corrected 26% last month
• VST Industries is up 5% this month
• It has gained 9% from its February low

The rebound in ITC and Godfrey Phillips share price signals that investors are reassessing the impact of the tax hike.

Main News: Excise Duty Hike and Cigarette Price Increase

The turning point came from reports of price hikes.

At the start of 2026, the government revised excise duty on cigarettes. The new levy ranges between:

• ₹2,050 to ₹8,500 per 1,000 sticks
• Higher tax applies to longer cigarette sticks

In addition:

• GST on tobacco products was increased to 40% from 28%

This created immediate pressure. The market feared margin compression and volume moderation.

But companies responded quickly.

Reports suggest cigarette makers are increasing prices in the range of 20–40% to offset the impact of the tax hike.

That changed sentiment in the stock market today.

How Pricing Action Is Impacting ITC and Godfrey Phillips Share Price?

Cigarette price hikes have historically helped companies absorb tax shocks.

Recent reports indicate that:

• Earlier estimates suggested EBIT decline of 8–15%
• With price hikes, the expected EBIT decline may be limited to 2%

This shift in perception is one of the biggest reasons behind the rebound in ITC and Godfrey Phillips share price.

In simple terms, higher prices are cushioning the blow.

Segment-Wise Price Adjustments

The tax hike affected different cigarette lengths differently.

Some key pricing changes include:

• 84 mm cigarettes price revised to ₹24 per stick from ₹17
• 64 mm cigarettes increased to ₹7 per stick from ₹5.9
• 69 mm Goldflake expected near ₹12, compared to Marlboro at ₹11.5

What stands out is the pricing strategy.

Premium cigarettes saw sharper price hikes.

Price-sensitive segments witnessed relatively calibrated increases.

This approach helps maintain volume stability while protecting margins.

Demand Trends: Why Volumes Matter?

Cigarette demand in India has traditionally been inelastic.

Even during tax-led price increases in the past:

• Volume declines were generally moderate
• Premium and mid-segment demand stayed relatively stable

For companies like ITC, this matters even more.

During the December quarter:

• Cigarette revenue grew 8%
• Volumes increased 7%

That performance came before the full impact of the February excise duty revision.

Now, with price hikes implemented, the focus is on whether volumes remain stable in the near term.

Company Positioning: ITC vs Godfrey Phillips

The business mix of both companies is different.

ITC

• Diversified presence in FMCG, hotels, and agri businesses
• Cigarettes are a key segment, but not the only earnings driver
• Higher realisations often offset mild volume pressure

Godfrey Phillips

• More cigarette-focused business model
• Strong exposure to premium and mid-tier brands
• Pricing power plays a bigger direct role in its profitability

This structural difference explains why Godfrey Phillips share price reacted sharply — both during the fall and during the rebound.

Margins and Profitability: The Real Story

Cigarettes in India already face one of the highest tax incidences globally.

• GST + compensation cess form a large portion of retail price
• Now GST stands at 40%

Historically:

• Leading players have operated at 30–40% EBITDA margins

Price hikes help companies:

• Offset higher excise duty
• Protect EBITDA margins
• Maintain operating leverage

Even a low-to-mid single-digit price hike can significantly impact profitability if volumes hold steady.

That’s why the narrative around ITC and Godfrey Phillips share price has shifted in the stock market today.

Risks That Still Remain

Despite the rebound, challenges remain:

• Higher retail prices may affect volumes temporarily
• Risk of down-trading to cheaper or illicit products
• Regulatory uncertainty
• ESG-related investment constraints

The cigarette sector has traditionally been viewed as:

• A stable cash-flow generating segment
• More defensive than high-growth

The recent rebound reflects stabilising expectations, not aggressive growth projections.

Why ITC and Godfrey Phillips Share Price Are Back in Focus?

The sequence of events is clear:

1. Government announces steep excise duty hike.
2. Stocks correct sharply.
3. Companies implement cigarette price hikes.
4. Margin concerns ease.
5. Stocks rebound.

The stock market today is reacting to clarity.

Earlier, there was uncertainty around how companies would absorb the tax shock. Now, pricing actions have brought visibility.

That visibility is driving recovery in ITC and Godfrey Phillips share price.

Summary: What the Stock Market Today Is Telling Us?

The story around ITC and Godfrey Phillips share price is not about sudden growth. It’s about resilience.

Key takeaways:

• Excise duty revised to ₹2,050–₹8,500 per 1,000 sticks
• GST increased to 40%
• Cigarette price hikes in the range of 20–40%
• ITC rebounded 7% from February low
• Godfrey Phillips surged 25% from February low
• December quarter: ITC cigarette revenue up 8%, volumes up 7%
• EBITDA margins historically in the 30–40% range

The cigarette sector faced a sharp tax shock.

Companies responded with pricing.

The market responded with a rebound.

For now, the recovery in ITC and Godfrey Phillips share price reflects improved clarity on margins after the excise duty hike.

And in the stock market today, clarity often matters more than optimism.

Source: Livemint