Godfrey Phillips' Q1 net profit fell 44% as higher excise duties weighed on profitability.
The stock dropped 8% despite revenue from operations more than doubling year-on-year.
Domestic cigarette sales volumes declined just 2%, reflecting resilient consumer demand.
Godfrey Phillips Shares Fall 8% As Q1 Profit Slumps 44% On Higher Taxes
The cigarette maker said a steep tax increase implemented in the March quarter hurt profitability, even as revenue from operations more than doubled
Godfrey Phillips Shares Fall 8% As Q1 Profit Slumps 44% On Higher Taxes Freepik
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Shares of Godfrey Phillips India fell over 8% on Tuesday after the cigarette maker reported a 44.3% year-on-year decline in consolidated net profit for the June quarter, citing the impact of a sharp increase in excise duty.
At around 12:21 p.m., the stock was trading 8.11% lower at ₹2,031 apiece.
The company reported a consolidated net profit of ₹198.39 crore for the quarter ended June 30, 2026, compared with ₹356.28 crore in the corresponding period last year.
Higher Taxes Weigh On Profitability
Chief Executive Officer Sharad Aggarwal said profitability declined sharply following the steep tax increase implemented in the fourth quarter of FY26.
"Due to the steep tax increase implemented in Q4 of FY26, the profitability has declined by 44% compared to the corresponding period last year," Aggarwal said in the company's earnings statement.
The Centre had imposed an excise duty ranging from ₹2,050 to ₹8,500 per thousand cigarettes, depending on product length, with effect from February 1, leading to higher cigarette prices.
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Despite the tax-led price hikes, Aggarwal said domestic cigarette sales volumes declined by only 2% during the quarter, reflecting the resilience of the company's brands and distribution network.
Revenue Doubles, But Net Revenue Declines
Revenue from operations more than doubled to ₹3,819.56 crore during the June quarter from ₹1,813.26 crore a year earlier.
The increase was largely due to the company paying ₹2,614 crore in excise duty during the quarter.
Excluding excise duty, net revenue stood at ₹1,206 crore, down 18.8% from ₹1,486 crore in the year-ago period.
Total expenses also doubled to ₹3,675 crore, while total income, including other income, rose to ₹3,897.83 crore.
Godfrey Phillips India, the flagship company of Modi Enterprises, manufactures cigarette brands including Four Square, Red and White, Cavanders, Tipper and North Pole. It also manufactures and distributes Marlboro in India under a licence agreement with Philip Morris.
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