Godfrey Phillips, VST Industries, and ITC shares extended their losing run to the second straight session on Monday, February 02, falling 8%, 2.7%, and 2.4% respectively, following a minimum ₹22–25 hike in cigarette prices per pack of 10 sticks on the implementation of additional excise duty from Sunday.
Earlier in January, the government imposed an excise duty on cigarettes, effective February 01, meaning consumers now need to spend more to buy the same pack of cigarettes.
The street is concerned that higher cigarette prices will impact sales and, in turn, the profitability of the companies. ITC generated 47% of its consolidated revenue from the cigarette segment during the December quarter.
According to a PTI report, premium cigarettes of 76 mm length will now cost between ₹50 and ₹55 more per pack of 10 sticks, depending on the brand.
A packet of Wills Navy Cut (76 mm), a popular mid-sized cigarette produced by ITC, previously priced at ₹95 per pack (10 sticks), is now expected to cost around ₹120 per pack, the report added.
Other well-known ITC brands of 84 mm length, such as Gold Flake Lights, Wills Classic, and Wills Classic Milds, which were priced at ₹170 per pack (10 sticks), are now expected to cost between ₹220 and ₹225 per pack.
All three stocks down by up to 26% in January
These stocks have remained under pressure since the policy change, with ITC share price closing January with a steep 20% fall, while Godfrey Phillips and VST Industries shares shed 26.3% and 9%, respectively, over the same period.
In terms of financial performance, Godfrey Phillips, which owns cigarette brands like Four Square, Red & White, and Cavanders, reported an 8.5% YoY rise in its consolidated net profit in the December quarter to ₹343 crore, while revenue from operations during the quarter stood at ₹1,829 crore, a 15% increase from ₹1,589 crore posted in the same period last year.
VST Industries, which has a portfolio of cigarette brands such as Charminar, Charms, Special, Moments, and Total, reported a 56% drop in its consolidated net profit to ₹60 crore from ₹136 crore in the December 2024 quarter, while revenue from operations during the same period came in at ₹373 crore, almost flat compared to ₹367 crore in Q3FY25.
ITC, which generates the majority of its revenue from the cigarette business, posted a consolidated net profit of ₹5,018 crore, largely unchanged from ₹5,013 crore in the same period last year. Its consolidated revenue from operations stood at ₹21,706 crore, up 6.7% YoY from ₹20,349 crore reported in the June 2024 quarter.
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