ITC Vs Godfrey Phillips Vs VST: 40% GST Rate On Cigarettes, Gutka, Pan Masala; Which Stock To Buy?

The GST 2.0 has come into effect from September 22, 2025. Among the key changes in GST rates is the elimination of the 28% and 12% rates, while the council retained only the dual GST of 5% and 18%. However, one of the biggest changes is the introduction of a 40% tax, which will be applied to sin goods, beverage and several other items. Stocks like ITC, Godfrey Phillips and VST Industries are in focus due to their exposure in cigarettes, tobacco and tobacco-related products which are now part of 40% GST rate.

GST Rate 40% On Cigarettes, PAN Masala, Tobacco, Non-Alcoholic Beverages And More:

-Pan masala

-All goods (including aerated waters), containing added sugar or other sweetening matter or flavored

-Other non-alcoholic beverages

-Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice

-Caffeinated Beverages

-Unmanufactured tobacco; tobacco refuse [other than tobacco leaves]

-Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes

-Other manufactured tobacco and manufactured tobacco substitutes; "homogenised" or "reconstituted" tobacco; tobacco extracts and essences

-Products containing tobacco or reconstituted tobacco and intended for inhalation without combustion

-Products containing tobacco or nicotine substitutes and intended for inhalation without combustion

-Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200cc or of length exceeding 4000 mm

-Motor vehicles with both compression-ignition internal combustion piston engine [diesel-or semi diesel] and electric motor as motors for propulsion, of engine capacity exceeding 1500cc or of length exceeding 4000 mm

-Motor cycles of engine capacity exceeding 350 cc

-Aircraft for personal use.

-Revolvers and pistols, other than those of heading 9303 or 9304

-Smoking pipes (including pipe bowls) and cigar or cigarette holders, and parts thereof

Majority of the tobacco related products had a GST rate of 28% before September 22. From Monday onward, with 40% GST rate in picture, the prices of these products are set to rise.

As of now, ITC is the leader in the cigarette market of India, with an estimated 75% market share, followed by Godfrey Phillips which has a 10% market share. Not too far is VST Industries at the third position with 9% share. The other category holds 6% market share in the industry.

Cigarette Stocks: September 22, 2025

At the time of writing, ITC stock price plunged by nearly 1% to trade at Rs 407.10 apiece, which was near its intraday low of Rs 406.35. The company's market cap stood at Rs 5,09,960.45 crore.

Further, Godfrey Phillip share price slipped by 1.52% to trade at Rs 3470.25 apiece on BSE, with market cap of Rs 54,129.57 crore. The stock had touched an intraday low of Rs 3452 apiece earlier.

Meanwhile, VST shares dropped by 0.50% to trade at Rs 267.70 apiece on BSE, which was near its intraday low of Rs 267.50 apiece. The stock's market cap is around Rs 4,549.73 crore.

ITC Vs Godfrey Phillips Vs VST: Which Stock To Buy After GST 2.0?

ITC Share Recommendation:

"For ITC, the existing GST rate (28%) + compensation cess on Cigarettes would continue for some more time, following which the GST rate would increase to 40%, the compensation cess would be discontinued and there could be some other changes to keep aggregate taxation largely intact," Amit Agarwal, SVP-Fundamental Research, Kotak Securities said on the GST 2.0 impact.

The consensus recommendation from 35 analysts for ITC Ltd. is STRONG BUY, as per Trendlyne data.

"We value ITC based on SOTP valuation methodology, with Cigarette business at 14.0x FY27E EV/EBITDA, Agri. Business at 8.0x FY27E EV/EBITDA, Paper business at 4.5.0x FY27E EV/EBITDA, FMCG at 8.0x FY27E EV/Revenue, and its stake in ITC Hotels at INR 13.0 per share (reflecting a 20.0% hold-co discount), implying a target price of INR 512," a Devan Chokey note said this month. This signals nearly 26% potential upside ahead.

Godfrey Phillips Share Recommendation:

Last week, Chandan Taparia, technical analyst at Motilal Oswal Financial Services told ET Now Swadesh, the chart structure of Godfrey Phillips India is strong. One can definitely consider buying Godfrey Phillips India shares at current levels for a target price Rs 4000 and Rs 4200 in the short to mid term. Maintain stop loss at Rs 3250.

VST Industries Share Recommendation:

The consensus recommendation from 1 analyst for VST Industries Ltd. is SELL, as per Trendlyne. However, the average target price is set at Rs 327, which signaled at more than 22% potential upside ahead.

Major Brands Of Top Cigarette Companies:

ITC: Gold Flake, Classic, Navy Cut, Scissors.

Godfrey Phillips: Marlboro, Four Square, Red & White

VST Industries: Charms, Charminar, Total & Special

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