ITC Shares Plunge 10% as New Excise Duty Forces Potential 15% Price Hike

• ITC shares plummeted 10% to a near three-year low, with Godfrey Phillips India and VST Industries also seeing significant drops, following a new excise duty on cigarettes.
• The Finance Ministry notified an excise duty of Rs 2,050–8,500 per 1,000 sticks, effective February 1, making cigarettes costlier for consumers.
• Brokerages like Jefferies and ICICI Securities view the duty as a "clear negative," expecting it to hurt sales volumes and increase overall costs by 22%-28%.
• ITC may need to hike cigarette prices by at least 15% to offset the new excise duty and the revised 40% GST rate on tobacco products.
• Experts warn of a substantial near-term deterrent for ITC's cigarette operations, impacting margins and volumes, leading to continued stock volatility.

Why It Matters: New excise duty and GST hike on cigarettes caused ITC shares to fall, forcing potential 15% price increases.