Shares of leading cigarette makers, including ITC and Godfrey Phillips India, surged sharply in trade after expectations of a potential price hike triggered strong investor interest.
The rally saw some stocks climb as much as 12%, with heavy buying across tobacco counters. Market participants believe that the possibility of companies raising cigarette prices — either to offset input cost pressures or improve margins — has renewed confidence in the sector’s profitability outlook.
Analysts note that cigarette companies typically pass on higher costs to consumers through price revisions. Given the pricing power enjoyed by established brands, investors often view such moves as earnings-positive in the medium term.
ITC, which commands a dominant share in India’s cigarette market, witnessed strong trading volumes as traders accumulated positions. Godfrey Phillips India also posted significant gains, reflecting optimism that the broader tobacco segment may see margin expansion if pricing adjustments materialise.
Apart from pricing prospects, steady demand and relatively stable taxation expectations have also contributed to improved sentiment. Cigarette stocks are often considered defensive plays due to consistent cash flows and strong distribution networks.
However, market experts caution that regulatory risks remain a constant overhang in the tobacco industry. Any policy or tax changes could quickly impact valuations. Investors are advised to track official announcements before making fresh allocations.
For now, momentum remains firmly on the upside as cigarette counters “light up” Dalal Street on renewed earnings optimism.
