Shares of main tobacco corporations remained underneath strain for a second straight session on Monday, with ITC, Godfrey Phillips India, VST Industries and Golden Tobacco are in focus after the implementation of a better excise obligation from February 1.
Godfrey Phillips India led the losses, falling as a lot as 6 per cent in early commerce to ₹1,877.30 in contrast with its earlier shut of ₹1,995.20. By 11.51 am, the inventory had recovered marginally to commerce at ₹1,898.70.
ITC shares slipped almost 2 per cent in early offers to ₹302, marking their second consecutive day of decline. At 11.49 am, the inventory was buying and selling at ₹306.70 on the NSE versus its prior shut of ₹309.45. VST Industries additionally got here underneath promoting strain, dropping round 3 per cent to ₹223.80 from ₹230.03.
The weak point in ITC adopted its December-quarter outcomes, the place the corporate reported a 6.13 per cent year-on-year decline in standalone web revenue for Q3 FY26 at ₹5,088.83 crore. A number of brokerages struck a cautious tone regardless of pointing to resilience in its core cigarette and FMCG companies, significantly amid latest tax hikes on cigarettes.
Bonanza stays cautious on ITC, VST Industries and Godfrey Phillips, as cigarette value hikes of twenty-two–50 per cent—particularly within the 75 mm-plus phase—are prone to weigh on volumes in India’s price-sensitive market.
Nitant Darekar, Analysis Analyst at Bonanza, mentioned the February 1, 2026 taxation framework poses important near-term challenges for tobacco shares, with excise duties set at ₹2,050–8,500 per 1,000 sticks together with 40 per cent GST, changing the sooner compensation cess regime.
Abhinav Tiwari, Analysis Analyst at Bonanza, mentioned ITC shares have been underneath pressure for the reason that authorities introduced the alternative of the GST compensation cess with excise duties on cigarettes based mostly on stick size, together with 40 per cent GST, according to public well being objectives and income wants after cess compensation.
In line with him, the efficient tax hike of greater than 40 per cent might translate into cigarette value will increase of over 25 per cent, doubtlessly resulting in a 15–17 per cent drop in volumes based mostly on channel checks. This, he famous, might end in income declining by 13–15 per cent and EBIT by 15–17 per cent because the trade heads into FY27, maintaining earnings per share underneath strain.
Tiwari added that the danger of illicit cigarette gross sales might rise additional, posing one other problem to future development. He additionally highlighted that the most recent Funds announcement by the Finance Minister has raised the Nationwide Calamity Contingent Responsibility on jarda scented tobacco and chewing tobacco from 25 per cent to 60 per cent beginning Might 2026, which he believes will stay an overhang for cigarette producers.
These mixed adjustments are anticipated to influence the operational efficiency for cigarette corporations except they’re handed on to clients, and if that occurs, quantity share will probably be a key monitorable, Tiwari mentioned.
In its Q3 FY26 commentary, ITC itself acknowledged that latest adjustments in GST and excise obligation charges have led to an unprecedented rise within the tax burden on cigarettes, warning that such a steep enhance might additional encourage illicit commerce and weigh on medium-term operational efficiency. The corporate, nevertheless, maintained that its long-term development trajectory stays intact, supported by regular progress in its non-cigarette companies.
Printed on February 2, 2026
