ITC, VST, Godfrey Phillips Fall Up To 6% As Excise Duty Hike Weighs On Tobacco Shares

Shares of ITC, Godfrey Phillips India and VST Industries fell as much as 5.7 per cent on February 2, 2026 after cigarette prices were hiked following the implementation of a higher excise duty from February 1, extending the ongoing sell-off in tobacco stocks. The stocks had already come under pressure after the Ministry of Finance last month issued a series of notifications to operationalise the new taxation regime for tobacco products.

Godfrey Phillips India emerged as the top laggard, tumbling 5.75 per cent to hit an intraday low of Rs 1,880, while VST Industries declined 2.70 per cent and ITC slipped 2.41 per cent on the NSE.

Cigarette companies have already begun passing on the higher tax burden to consumers, with retail prices reportedly rising by Rs 22–25 for a pack of 10 sticks. The revised structure pegs excise duty between Rs 2,050 and Rs 8,500 per 1,000 sticks, over and above a 40 per cent goods and services tax (GST), significantly increasing the total tax incidence. The sharp jump in taxation has raised concerns about weaker demand, pressure on profit margins, and an increased risk of consumers shifting to illicit cigarettes.

This is a developing story...