ITC, Godfrey Phillips, VST Ind Share Price Slide as New Cigarette Tax Hits Tobacco Stocks

Market Performance: Tobacco Stocks Under Pressure

Tobacco-related stocks stayed under pressure for the second straight session on stock market today, as the new cigarette tax regime kicked in from February 1, 2026. The mood around the sector remained cautious, and that caution clearly showed up on the price charts.

Over the last two trading sessions, investors saw sharp cuts across key tobacco names:

• ITC share price fell over 5%
• Godfrey Phillips slipped more than 6%
• VST Ind share price declined over 3%

The selling came even as the broader market stayed stable, highlighting how stock-specific this move was.

At around 10:11 AM on Monday:

• ITC was down 1.58% at ₹304.70
• Godfrey Phillips India dropped 4.60% to ₹1,902.80
• VST Industries traded 1.87% lower at ₹225.45

In contrast, the BSE Sensex was marginally higher, up 0.14% at 80,838.22, showing that the weakness was largely limited to tobacco stocks.

Main News: New Cigarette Tax Takes Effect

The pressure on tobacco stocks came after the revised excise duty structure on cigarettes came into force from February 1, 2026. The new tax framework directly impacts cigarette pricing across different categories.

As per the updated structure, excise duty on cigarettes is now fixed in the range of:

• ₹2,050 to ₹8,500 per 1,000 sticks

The tax slabs are linked to cigarette length and filter type:

• Cigarettes up to 65 mm fall in the lowest duty bracket
• Cigarettes above 75 mm fall into the highest duty bracket

This sharper tax structure has raised concerns around pricing adjustments across the industry, which is why cigarette-focused companies witnessed selling pressure immediately after the implementation.

Company Details: How Key Stocks Reacted?

ITC Share Price

ITC, the country’s largest listed tobacco company, remained in focus as the stock extended its decline to over 5% in two sessions. The market reaction reflects concerns around how higher cigarette duties could affect volumes and pricing dynamics going forward.

Godfrey Phillips India

Godfrey Phillips saw the sharpest reaction among the major players, with the stock slipping more than 6% over two days. The sharper fall suggests heightened sensitivity to tax-related changes within its cigarette-led business model.

VST Industries

VST Ind share price also stayed under pressure, down over 3% in the last two sessions. While the fall was relatively lower compared to peers, the stock still tracked the overall negative sentiment in the tobacco space.

Why Tobacco Stocks Are Feeling the Heat?

The reason behind the decline is straightforward. A higher excise duty typically leads to:

• Steeper cigarette prices
• Pressure on sales volumes
• Tighter margins for manufacturers

Markets tend to price in these factors quickly, especially when tax changes are immediate and clearly defined, as in this case.

Summary: What Investors Are Watching Next?

To sum it up, tobacco stocks such as ITC, Godfrey Phillips, and VST Industries have come under pressure as the new cigarette tax regime takes effect.

• Stocks have corrected up to 6% in just two sessions
• The weakness is sector-specific, not market-wide
• The revised excise duty structure has altered near-term sentiment around cigarette businesses

For now, the market is closely tracking how these tax changes play out in actual numbers over the coming quarters. Until then, tobacco stocks may continue to see cautious trading as investors digest the impact of the new duty framework.

Source: Business Standard