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ITC Hits 52-Week Low, Godfrey Phillips Plunges 19% on New Excise Duty

Major cigarette stocks plummeted after the government announced a new excise duty, effective February 1, which will be levied over the existing GST. ITC shares fell to a 52-week low, pressured by both the duty news and a large block deal. Godfrey Phillips saw an even steeper intraday drop of nearly 19%. The duty replaces a previous compensation cess and is expected to raise cigarette prices, potentially hurting demand and company earnings.

Key Points: ITC, Godfrey Phillips Fall on Higher Cigarette Excise Duty

  • New excise duty from Feb 1
  • ITC hits 52-week low
  • Godfrey Phillips plunges 19%
  • Duty replaces compensation cess
2 min read

ITC falls to 52-week low, Godfrey Phillips plunges on higher excise duty from Feb

Shares of ITC and Godfrey Phillips plunged after the government announced a new excise duty on cigarettes, effective February 1, raising concerns over sales and earnings.

"The duty has been fixed in the range of Rs 2,050 to Rs 8,500 per thousand cigarette sticks. - Government Order"

Mumbai, Jan 1

Shares of major cigarette makers fell sharply on Thursday after the government announced to slap a fresh excise duty on cigarettes next month, a move that is expected to push up prices and impact sales.

Stocks of ITC and Godfrey Phillips dropped by as much as 19 per cent during the intra-day's trade on Thursday.

According to a government order, the new excise duty will come into effect from February 1.

The duty has been fixed in the range of Rs 2,050 to Rs 8,500 per thousand cigarette sticks, depending on the length of the cigarettes.

This additional tax is likely to make cigarettes more expensive, which could hurt demand and weigh on the earnings of cigarette companies.

Following the announcement, ITC shares fell up to 10 per cent on the BSE and hit a 52-week low of Rs 362.70.

The stock also came under pressure due to a large block deal reported during the session, which added to the selling momentum.

Over the past one year, ITC shares have declined 17 per cent and are down 9 per cent in the last six months.

The company remains one of the heavyweight stocks in the benchmark indices, with a market capitalisation of over Rs 4.75 lakh crore.

Godfrey Phillips shares saw an even steeper fall. The stock tumbled nearly 19 per cent to touch the day's low of Rs 2,230.15 on the BSE.

Despite the sharp fall on Thursday, the stock is still up nearly 49 per cent over the past one year.

The new excise duty on cigarettes will be levied over and above the goods and services tax. As per the new structure, cigarettes, tobacco and similar products will attract a GST rate of 40 per cent from next month.

The excise duty will replace the compensation cess that was earlier imposed on these products.

The change follows Parliament's approval of an amendment law in December that replaces the temporary levy on cigarettes and tobacco products.

- IANS

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Reader Comments

S
Sarah B
As an investor, this is a tough pill to swallow. ITC has been a steady dividend payer for years. The government keeps changing the tax structure, making it very hard to have a long-term view on FMCG stocks now.
A
Arjun K
The fall was expected. But maybe a buying opportunity for long-term? ITC is diversifying into hotels and FMCG. The cigarette business funds that growth. Once the dust settles, the stock might recover. What do others think?
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Priya S
My father has been trying to quit. He says if the price goes up by another ₹20 per pack, it might finally push him to stop. From a family perspective, this tax hike might actually help many households.
V
Vikram M
While the health angle is good, the government's approach feels inconsistent. They profit massively from this "sin tax" revenue. If they truly wanted to curb smoking, they'd ban gutka and regulate the illegal cigarette trade more strictly. This just feels like an easy revenue grab before the budget.
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Karthik V
Godfrey Phillips down 19% in a day! That's brutal. Shows how dependent these companies are on government policy. Small investors who entered recently must be feeling the heat. Market volatility is no joke.

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