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ITC took another round of price in its cigarette portfolio in Sept-26; covers ~60-70% of overall tax hike

ICICIdirect Research 25 Sep 2026 DISCLAIMER

ITC increased the price of Classic Connect (20 sticks pack) to ₹428 from ₹390, while Gold Flake Superstar (10-sticks pack) has been raised to ₹89 from ₹79, implying hikes of ₹38 and ₹10, respectively. It has increased the price of Gold Flake Premium (10-stick pack) by 8%, raising the prices to ₹135 from ₹125.
Brand-wise, Classic Connect has seen a ~43% cumulative price hike from ~₹15/stick to ₹21.5/stick, while Classic Mild has increased from ₹17/stick in December to ₹24 currently and as per our channel check it could reach ₹26/stick, implying ~53% cumulative price hike. Gold Flake premium cumulative price increase stands at ~17% to Rs14/stick from Rs12/stick.
Above price hikes covers around 60-70% of overall required price hike in the cigarette portfolio to mitigate the impact of significant tax hike. Weighted average tax hike for ITC stood at 28-30%.
Price hikes will have impact on cigarette sales volume in Q2FY27 and Q3FY27. With the company likely to complete the portfolio price hike by Q3FY27, we expect sales volume to gradually recover from Q4FY27.
View: Calibrated price hikes are putting less stress on cigarette business sales volume. Empirical evidence is 5% volume decline in Q1FY27 vs. anticipated volume dip of ~10. Thus, we expect price hikes to get absorb fast in the market and volumes to recover from Q4FY27.  ITC stock price has corrected by 33% since the government announcement of significant price hike on cigarettes. Downside risk is limited from the current level. Hence, we recommend Buy on the stock with a price target of Rs341.

 

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