ITC, Godfrey Phillips shares surge up to 6.6%; what is driving cigarette players' stocks?

VST Industries reported robust results for the March quarter (Q4 FY26), which lifted sentiment across cigarette makers. The strong earnings triggered a rub-off effect on ITC and Godfrey Phillips, driving gains in both stocks.

At the time of writing this article, ITC shares were trading 1.43% higher at ₹307.75 apiece on the NSE, while Godfrey Phillips India jumped up to 6.68% to ₹2,267.

Here is how VST Industries fared in Q4 FY26

VST Industries reported a robust set of numbers for the March quarter (Q4 FY26), with net cigarette revenue rising 25% year-on-year to ₹1,151 crore, compared to ₹921 crore in the year-ago period.

The company’s EBITDA for FY26 jumped 61% to ₹450 crore from ₹279 crore, reflecting strong operational performance and improved efficiencies.

Volume growth and margins improve

Cigarette volumes also saw healthy traction, with average monthly volumes rising to 667 million units in Q4 FY26 from 647 million units a year ago. For the full year FY26, volumes stood at 696 million units, up from 641 million units in FY25.

EBITDA margin expanded sharply to 30.3% in the March quarter from 15.3% a year ago, indicating strong margin recovery driven by operating leverage and improved product mix.

Profit growth remains steady

Profit after tax (PAT) for the quarter came in at ₹116.7 crore, more than doubling from ₹53 crore in Q4 FY25. On a full-year basis, PAT stood at ₹292.3 crore, broadly stable compared to ₹290.4 crore in FY25.

What the company said

The company said that with effect from February 1, 2026, the Government of India reduced the levy of compensation cess on cigarettes to 'nil', and at the same time, GST and excise duty on the subject product were increased significantly. Due to such amendments in indirect taxes, the figures for 'Gross Sales' (net of GST and compensation cess) and 'Excise Duty' for the quarter and year ended March 31, 2026, are not comparable.

MD Speak

Commenting on the performance of the company, Piyush Srivastava, Managing Director, said, “In 2025, we achieved robust volume recovery supported by our enhanced brand portfolio and disciplined in-market execution. While geopolitical instability in the Middle East continues to weigh on our unmanufactured tobacco business, our productivity initiatives have delivered strong double-digit profit growth."

"Given the extraordinary tax increases, a challenging year awaits us. We will remain focused on strengthening our brand portfolio and in-market execution. We remain steadfast in our commitment to creating superior value for consumers and stakeholders," Srivastava added.

Shares of VST Industries zoomed as much as 18.7% to ₹286.78 apiece on the NSE.