Cigarette Stocks Surge Amid Strategic Price Hikes

Shares of major cigarette and tobacco companies ITC, Godfrey Phillips India, and VST Industries surged by up to 20% on Wednesday. This rally follows the companies' decision to increase cigarette prices to mitigate the impact of a recent excise duty hike.

Godfrey Phillips India saw its stock soar by 19.93%, closing at Rs 2,479.75 on the BSE. The stock hit an intraday high of Rs 2,481.30, marking its upper price band on the bourse. Meanwhile, VST Industries' stock rose by 2.97% to settle at Rs 246.55, and ITC extended its gains for the third straight session, increasing by 2.21% to end at Rs 332.50.

Vinod Nair, Head of Research at Geojit Investments Ltd, noted that cigarette stocks have rebounded strongly after companies implemented decisive price hikes. The recent increase in the Goods and Services Tax (GST) on tobacco products, alongside additional excise duty, prompted the price adjustments. Despite the temporary impact on volumes, cigarette firms' strong pricing power ensures they maintain profitability even under elevated tax regimes.