ITC, Godfrey Phillips Shares Rise 2% As Gold Flake Premium Price Hiked Again, What Changed?
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Cigarette prices are rising again after the new 40% GST regime and additional excise duty took effect from February 1.
ITC and Godfrey Phillips India shares ended higher on Wednesday after another reported increase in cigarette prices brought the focus back to how tobacco companies are passing on the impact of higher taxes to consumers. Gold Flake Premium, one of ITC’s key cigarette brands, has seen its price raised for the second time this year, with a 10-cigarette pack now reported to cost ₹135, up from ₹125.
ITC shares ended 1.49% higher at ₹269.75, gaining ₹3.95, while Godfrey Phillips India closed at ₹2,004, up ₹34 or 1.73%. During the session, Godfrey Phillips had gained as much as 2%, while ITC was up around 1.5%.
According to dealer checks cited by NDTV Profit, the latest Gold Flake Premium price increase amounts to about 8%. The brand was priced at ₹115 for a 10-cigarette pack earlier this year, before the price was raised to ₹125 in June. The latest revision takes the total increase since the start of the year to 17.4%.
The latest move comes as cigarette makers continue to adjust retail prices following changes to the tax structure that took effect from February 1.
Why Are ITC And Godfrey Phillips Shares Rising?
Cigarettes now attract 40% GST along with an additional excise duty, with the additional levy varying based on cigarette length and whether the product is filtered or unfiltered. The changes have increased the tax burden on cigarette makers and prompted a series of price revisions across brands.
ITC has raised prices on several products this year. Dealer checks earlier this month showed the price of a 20-cigarette pack of Classic Connect increasing from ₹390 to ₹428, a rise of 9.74%. Gold Flake Super Star, meanwhile, was reported to have become costlier, with its 10-cigarette pack price moving from ₹79 to ₹89, a 12.66% increase.
The company had also revised prices soon after the new tax structure came into effect. Classic Connect moved from ₹300 to ₹360 and then to ₹390, while Gold Flake Super Star rose from ₹59 to ₹70 for a 10-cigarette pack.
The repeated price increases are now putting the spotlight on the balance between higher realisations and cigarette volumes. For tobacco companies, raising prices can help absorb part of the additional tax burden, but the extent to which higher prices affect consumption remains an important factor for the sector.
For ITC and Godfrey Phillips, the latest stock moves suggest that investors are tracking the continuing pricing actions across the cigarette industry, particularly as companies respond to the higher tax incidence while seeking to protect margins.
At Wednesday’s close, ITC stood at ₹269.75, while Godfrey Phillips India was at ₹2,004.
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This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
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