Cigarette Price: Big news for smokers. With the new taxes on cigarettes and tobacco products taking effect on February 1st, companies are gearing up to transfer this tax burden to consumers. Reports indicate that tobacco manufacturers have raised cigarette prices. Consequently, shares of ITC and Godfrey Phillips are experiencing notable gains due to this development.
A report reveals that cigarette manufacturers have raised prices significantly to counter the effects of the excise duty hike, leading to an increase in profit per cigarette (EBIT). However, Jagran Business has not been able to independently verify this information.
How much have cigarette prices increased?
The report also mentions that Godfrey Phillips India has raised the price of Marlboro Compact from Rs 9.5 to Rs 11.5 per cigarette. One estimate suggests that around 50 percent of ITC’s products may see price increases that exceed expectations due to the rise in cigarette prices. Additionally, both companies are set to launch new products in the 74 mm category, which will also experience significant price hikes.
B&K Securities noted in the report that while the price increase may have a slight effect on sales, the overall decline in profits could be offset. According to the report, prices for ITC Gold Flake and Classic (Premium) have risen by 41%, while Classic Connect (Slim) prices have dropped by 20%, and Gold Flake Superstar (Value) prices have increased by about 19%.
The government has introduced a 40 percent excise duty on cigarettes and other tobacco products, in addition to the GST. The Finance Ministry announced that the excise duty, which ranges from Rs 2,050 to Rs 8,500 per 1,000 sticks based on the length of the cigarette, came into effect on February 1.
Big impact on the stock market
The war impact is clearly visible in the stock market as well. Cigarette company shares have fallen by 10-17% since the beginning of the year, with ITC Ltd falling by nearly 17% to around ₹300, while Godfrey Phillips India and VST Industries have also seen declines. Experts believe that companies’ profits could face 15-20% pressure in the future, as it is difficult to fully pass on increased costs to consumers.
