Shares of leading cigarette and tobacco product manufacturers continued to weaken in Friday’s morning session, extending losses from the previous day after the government announced higher indirect tax levies on tobacco products effective from February 1.
Stocks of ITC, Godfrey Phillips India, and VST Industries were all trading lower, reflecting sustained selling pressure across the sector.
ITC Hits Fresh 52 Week Low
ITC shares fell sharply by 5.11 percent to Rs 345.35 on the BSE, marking a fresh 52 week low for the stock. The decline added to Thursday’s steep fall, when the stock had closed nearly 10 percent lower.Godfrey Phillips India slipped 4.58 percent to Rs 2,184.60, while VST Industries declined 2.56 percent to Rs 248.60 during morning trade.
Heavy Selling Seen in Previous Session
The pressure on tobacco stocks had already intensified in the previous session. Godfrey Phillips India had plunged 17.09 percent to close at Rs 2,289.65. ITC had ended Thursday’s trade down 9.69 percent at Rs 363.95, while VST Industries had slipped 0.60 percent to Rs 255.15.The continued weakness on Friday suggests that investors remain cautious after the announcement of additional tax measures impacting the sector.
Higher Levies on Cigarettes and Pan Masala
Under the revised framework, cigarettes will attract an additional excise duty ranging between Rs 2,050 and Rs 8,500 per 1,000 sticks, depending on the length of the cigarette. This levy will be imposed over and above the existing 40 percent Goods and Services Tax and will come into effect from February 1.For pan masala and related products, a new cess linked to manufacturing capacity will be implemented from the same date. Despite the structural changes, the overall tax burden on pan masala, including GST, will be maintained at the current level of 88 percent.
Shift From Earlier Tax Structure
The new tax structure replaces the earlier system that included a 28 percent GST along with a compensation cess on tobacco and related products. The transition to the revised framework has triggered heightened volatility in tobacco stocks, with investors factoring in the impact of higher duties on pricing and volumes ahead of the February rollout.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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