Godfrey Phillips, ITC and other cigarette stocks surge up to 12%. What’s driving the rally?
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Shares of cigarette makers ITC Ltd, Godfrey Phillips India Ltd, and VST Industries Ltd surged up to 12% after media reports indicated that companies have raised prices to pass on higher costs to consumers. The price hikes are aimed at offsetting the recent excise duty increase. As a result, the expected EBIT decline is now seen at around 2%, compared with earlier estimates of 8–15%. Shares of ITC Ltd extended gains for a third straight session, rising 2% to Rs 331 on the day and about 5.5% over the past three sessions. Meanwhile, Godfrey Phillips India Ltd surged 12% to Rs 2,315 per share on the BSE, taking its two-day rally to more than 15%. Another cigarette maker, VST Industries Ltd, advanced 3.3% in the morning. Under the new framework, excise duties on cigarettes were restructured to a range of Rs 2,050 to Rs 8,500 per 1,000 sticks, alongside a 40% GST. This has materially raised the overall tax burden on cigarettes, triggering conce...