Cigarette Stocks Plunge as New Excise Duty Looms; Prices to Soar

• Central government imposed a new excise duty on cigarettes, causing shares of ITC and Godfrey Phillips to plummet by up to 10%.
• The new duty, effective February 1, 2026, aims for a sustainable tax structure, adding to existing 28% GST and cesses.
• Investors fear higher taxes will lead to decreased sales and pressure on profit margins for cigarette companies.
• Analysts predict a 22-28% increase in manufacturing costs for certain cigarette lengths, potentially raising prices by ₹2-₹3 per stick.
• The move, following the Central Excise (Amendment) Bill 2025, will directly impact India's 10 crore smokers with more expensive cigarettes.

Why It Matters: New excise duty on cigarettes caused stock plunges for ITC and Godfrey Phillips, signaling higher prices for consumers.