Synopsis :- One of the largest cigarette manufacturers has raised prices up to 41% on premium brands, with smaller hikes on value and slim variants, aiming to protect margins despite potential minor volume impact.
The largest cigarette manufacturer and seller in the country has come into focus after announcing a sharp price increase across its cigarette portfolio, with hikes reaching up to 41 percent for key premium brands.
With the market capitalization of Rs. 4,07,387.89 crore, the shares of ITC Limited were trading at Rs. 325.15, up by 2.26 percent from its previous day’s close price of Rs. 317.95 per equity share. The stock has touched an intraday high of Rs. 328.05, implying an increase of 3.18 percent from previous day’s close price.
ITC Ltd has announced a sharp price increase across its cigarette portfolio. Analysts at B&K Securities and InCred note that this move largely offsets the impact of higher excise duties and the new GST structure on the company’s operating income.
Price Hikes by Brand
The price increases are significant across several categories:
- Gold Flake (Premium) – Price increased by 41 percent, from Rs. 170 per pack of 10 sticks to Rs. 240, translating to Rs. 24 per stick.
- Classic Regular/Mild/Ultra (Premium) – Up 41 percent, from Rs. 340 per pack of 20 sticks to Rs. 480, or Rs. 24 per stick.
- Classic Connect (Slims) – Increased by 20 percent, from Rs. 300 per pack of 20 sticks to Rs. 360, or Rs. 18 per stick.
- Gold Flake Superstar (Value) – Rose by nearly 19 percent, from Rs. 59 per pack of 10 sticks to Rs. 70, or Rs. 7 per stick.
Excise and GST Impact
The price revision follows a major overhaul in cigarette taxation. GST on cigarettes has been raised to 40 percent from February 1, 2026, replacing the previous 28 percent GST plus compensation cess structure. Additionally, excise duties now range from Rs. 2.05 to Rs. 8.50 per stick, depending on cigarette length:
- Short non-filter cigarettes (up to 65 mm) – ~Rs. 2.05 per stick
- Short filter cigarettes (up to 65 mm) – ~Rs. 2.10 per stick
- Medium-length cigarettes (65–70 mm) – ~Rs. 3.6–4 per stick
- Long, premium cigarettes (70–75 mm) – ~Rs. 5.4 per stick
- Unusual/non-standard designs – up to Rs. 8.50 per stick
Distribution and Inventory
Distributors are still receiving older inventory at pre-hike prices, but invoice sizes are now capped at Rs. 60 lakh per day, compared to no limit earlier. ITC has not provided clarity on when the new-priced inventory will be widely available.
Future Product Strategy
Analysts from B&K Securities suggest that ITC is likely to launch additional products in the 74 mm category, with larger price increases aimed at mitigating excise impacts on king-size brands. While such hikes may slightly affect volumes, overall profitability is expected to remain resilient.
Financial Impact
The recent price revision allows ITC Limite d to pass on the impact of higher GST and excise duties to consumers, ensuring that the company’s margins and profitability are maintained. Premium brands like Gold Flake and Classic, which saw the sharpest increases, will contribute higher revenue per pack, helping support overall top-line growth. While some volume moderation may occur in value and slim categories, the move is expected to safeguard EBITDA and PAT margins.
This approach provides ITC with the flexibility to manage cost pressures efficiently and continue delivering strong operating performance, while maintaining affordability and availability of products for consumers. Analysts expect the pricing adjustment to mitigate margin compression and sustain earnings from the company’s core premium segments.
About the Company & Financial
ITC Limited is a diversified Indian conglomerate with operations across FMCG, cigarettes, paperboards and packaging, agri-business, hotels, and services. Its portfolio spans foods, personal care, stationery, cigarettes, packaging solutions, exports, IT services, and agri-linked businesses, with a strong domestic and international presence.
A return on equity (ROE) of about 27.3 percent, a return on capital employed (ROCE) of about 36.8 percent and debt to equity ratio at 0.01 demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 19.8x lower as compared to its industry P/E 43.8x.
In Q3 FY26, the company reported a revenue of Rs. 20,047 crore, up 6.7 percent YoY from Rs. 18,790 crore in Q3 FY25 and 2.8 percent QoQ from Rs. 19,502 crore in Q2 FY26, reflecting steady top-line growth across its business segments.
EBITDA for the quarter rose to Rs. 6,883 crore, showing a 8.2 percent YoY increase from Rs. 6,362 crore in Q3 FY25 and a 2.8 percent QoQ rise over Rs. 6,695 crore in Q2 FY26. The EBITDA margin improved slightly to 34.3 percent, indicating efficient cost management.
Profit after tax stood at Rs. 5,018 crore, largely flat YoY compared to Rs. 5,013 crore in Q3 FY25, while it declined 3.3 percent QoQ from Rs. 5,187 crore in Q2 FY26. The PAT margin was at 25.0 percent, highlighting stable earnings despite a modest sequential dip.
Key Takeaway for Smokers
Smokers should expect higher costs across premium Gold Flake and Classic brands, with the sharpest increase of 41 percent on core products. Smaller price rises affect value and slim categories. ITC’s pricing strategy highlights its effort to maintain margins amid the new tax regime while preparing for future product launches.
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