Godfrey Phillips Share Price Extends Rally as Cigarette Makers Raise Prices After Tax Hike

Godfrey Phillips share price gained strongly again on Thursday, extending its sharp three-day rally to nearly 31%. The stock climbed over 6% during the session before trimming gains, reflecting renewed investor interest in cigarette companies after the latest tax changes.

The recent rise comes as cigarette makers across the industry have reportedly taken firm price hikes to offset the impact of higher taxes introduced earlier this month.

Why Are Cigarette Stocks Rising?

The rally in cigarette stocks is largely linked to pricing action taken after the government increased cigarette taxation effective February 1, 2026. The new tax structure replaced the earlier system of 28% GST plus compensation cess. It has now been revised to 40% GST, and a new per-stick excise duty based on cigarette length

This raised concerns about near-term profitability, as higher taxes can squeeze margins unless companies raise retail prices. However, recent price increases suggest cigarette makers are trying to protect earnings by passing on the higher tax burden to consumers.

Demand Seen as Stable Despite Higher Prices

The market appears to be factoring in that the earlier weakness in cigarette company performance was driven mainly by tax changes rather than any major slowdown in demand.

Although higher retail prices may impact volumes in the short term, cigarette companies have historically shown strong pricing power. This ability to increase prices during higher tax regimes is one of the reasons investors are revisiting the sector.

Godfrey Phillips Financial Performance 

Godfrey Phillips reported domestic cigarette sales volume growth of 25% in the first nine months of FY26 compared with the same period last year. Unmanufactured tobacco exports reached ₹1,255 crore, contributing 22% of the company’s net sales. The company has also indicated it is looking to accelerate growth in this export segment.

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Conclusion

Godfrey Phillips India’s sharp rally reflects growing investor confidence that cigarette makers can manage the latest tax hike through timely price increases. With stable demand, strong pricing power, and steady FY26 performance so far, the stock has returned to focus, even as the market continues to assess the longer-term impact of higher taxation on volumes.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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