ITC, Godfrey Phillips, VST: What analysts expect from cigarette stocks in Q2 after new tax regime
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓ITC, Godfrey Phillips, and VST Industries faced pressure in Q1 FY27 due to higher taxes.
- ✓Analysts expect some margin improvement in Q2 FY27 as companies pass costs to consumers.
- ✓Avinash Gorakshakar said, "Higher cigarette prices should support a sequential recovery in margins after the sharp impact of taxation."
Story at a Glance
- Category
- MARKET
- Reported By
- Livemint
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
Indian tobacco and cigarette manufacturing companies like ITC, Godfrey Phillips India, and VST Industries faced a significant pressure in the first quarter as the higher tax burden squeezed margins and affected profitability.
According to analysts, with companies now having more time to implement price increases and pass on higher taxes to consumers, some sequential improvement in margins in Q2 FY27 is expected.
Indian tobacco companies have been dealing with a major structural change in taxation. The earlier framework of 28% GST plus variable Compensation Cess has been replaced by a uniform 40% GST slab, along with higher length-based Additional Excise Duties ranging from ₹2,050 to ₹8,500 per 1,000 sticks. NCCD continues to apply, while the valuation framework has also shifted to mandatory MRP-based calculations.
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