ITC, other cigarette stocks rise up to 13%: Price hike, four other reasons behind renewed buying interest

Cigarette stocks

• ITC and Godfrey Phillips lead cigarette stocks surge after days of underperformance.
• Price hikes and strong quarterly results boosted investor confidence
• Nuvama expects no major tax hikes for cigarette stocks in next two years

Did our AI summary help?

The shares of cigarette-makers jumped in trade on February 6, after days of underperformance. Five key reasons are behind the sharp uptick in the stock prices today.

ITC shares gained nearly 6 percent to trade at Rs 327.7 apiece on Friday, snapping a two-session losing streak. The stock later pared some gains to close at Rs 326.35 (up more than 5 percent).

Godfrey Phillips India shares meanwhile gained nearly 13 percent to trade at Rs 2,229.50 apiece. At close, the stock was up around 10 percent at Rs 2,174 apiece.

Here are five key reasons behind the sharp rise in cigarette stocks today:

Nuvama says 'worst is behind' for cigarette stocks:

Nuvama in its latest note said that the "worst is behind" for cigarette stocks, according to NDTV Profit. The report further quoted the international brokerage as saying that the price hikes have already started and cigarette volumes may not see double digit decline next year.

Cigarette prices have increased sharply showing pricing power, Nuvama said, adding that it expects the companies to implement two-three staggered price hikes over the next few months to offset the tax impact.

Nuvama doesn't expect any significant tax hikes in the next two years, which provides medium to long term visibility, the report added. The international brokerage added that cigarette stocks are in a heavily sold zone and have high comfort in valuatiions.

Block deals:

ITC shares saw a number of block deals being executed at a premium to its current levels. According to data, more than 1.3 crore shares were traded via block deals at an average price of Rs 321.80 apiece.

This marked a premium of nearly 4 percent on the stock’s previous closing price of Rs 310.2 apiece.

Value buying:

The sharp rise in the stocks also comes on the back of value buying, after days of underperformance after the tax hike was notified earlier this year. In January, ITC, Godfrey Phillips India, and VST Industries shares dropped 20.1 percent, 26.3 percent and 8.9 percent, respectively.

Price hike:

Cigarette prices have risen sharply after the new excise duty regime came into force, with a pack of 10 sticks now costing at least Rs 22-55 more than earlier. This came after the government hiked duties on cigarettes and other tobacco products.

The Parliament in December last year approved the Central Excise (Amendment) Bill, 2025, clearing the way for a sharp increase in duties on cigarettes and other tobacco products. It replaces a temporary levy on cigarettes and tobacco products.

The excise duty would be imposed on cigarettes in addition to a 40 percent GST, according to an order. The finance ministry notified that an excise duty of Rs 2,050–8,500 per 1,000 sticks, depending on cigarette length, took effect from February 1.

The duty translates into a 22-28 percent increase in overall costs for 75-85 mm cigarettes, analysts at ICICI Securities said. Distributors said premium cigarettes of 76 mm length are now likely to be priced Rs 50-55 higher per pack of 10 sticks, depending on the brand. It should be noted that cigarette manufacturers have yet not formally announce revised maximum retail prices.

The rise in the cigarette prices may have boosted the stocks.

Strong results:

ITC in January reported a 6.4 percent YoY rise in net profit to Rs 5,087.87 crore for the October-December quarter of FY26, as against Rs 5,436.3 crore in the same period of the previous financial year.

The company’s revenue from operations meanwhile surged 6.66 percent to Rs 21,706.64 crore during the quarter under review.

Godfrey Phillips meanwhile reported a consolidated net profit of Rs 343.29 crore for Q3 FY26, marking a 9 percent YoY rise from the Rs 315.85 crore net profit reported in Q3 FY25. The firm’s revenue from operations meanwhile rose around 16 percent YoY to Rs 2,189.93 crore during the quarter under review.

Godfrey Phillips India has cigarette brands like Four Square, Red and White, Cavanders, Tipper and North Pole. It also manufactures and distributes the brand Marlboro under a license agreement with Philip Morris. The rise in Godfrey Phillips stock comes ahead of results of its promoter Phillip Morris.

Follow all LIVE updates from the stock markets here.