Godfrey Phillips Slumps 19% on Cigarette Excise Hike
Godfrey Phillips Slumps 19% on Cigarette Excise Hike
Godfrey Phillips slides after a new Central Excise (Amendment) Bill 2025 adds excise to the GST on cigarettes, signaling tighter tax policy for tobacco firms.
Shares of Godfrey Phillips India Ltd plunged in early calendar year trading after the government announced an excise duty on cigarettes, to be effective February 1. The stock fell 19.24% in the session, hitting a low of Rs 2,230.15 amid fresh policy moves.
The government notification ties to the Central Excise (Amendment) Bill 2025, which replaces a provisional levy on cigarettes and tobacco products. The excise will be charged in addition to the existing 40% GST, tightening the overall tax structure for the industry. Industry observers note that taxes on tobacco could rise further when combined with size-based levies, with India currently taxing cigarettes at up to 53% of retail value (28% GST plus a size-based levy).
From a chart perspective, GPIL traded below major moving averages across 5-, 10-, 20-, 30-, 50-, 100-, 150- and 200-day SMAs. The 14-day RSI stood at 26.05, signaling oversold conditions, while experts like Ravi Singh of Mastertrust cautioned the stock could slip toward the Rs 2,200 level in the near term.
On the fundamentals, GPIL's price-to-earnings stands around the high 20s and price-to-book near 9, while earnings per share are in the 79-80 rupee range. The broader tobacco sector, including ITC, has faced similar pressure as investors weigh higher taxes against potential demand shifts. Analysts point out that while higher levies can impact margins, some players may pass costs through to consumers, keeping an eye on evolving policy implementation as February 1 approaches.
