ITC Ltd. experienced a notable surge in its share price on Thursday, climbing almost 2% following news of a price increase for its Gold Flake Premium cigarettes. The adjustment sees the maximum retail price (MRP) of a 10-cigarette pack rise by ₹10, from ₹125 to ₹135. This constitutes approximately an 8% increase and marks the second such revision for the brand within the current year.
Details of the Price Revision
The latest price hike applies specifically to Gold Flake Premium regular-size filter-tipped (RSFT) cigarettes, typically measuring between 60-70 mm. While ITC has not yet officially confirmed the revision, new MRP packs are anticipated to begin reaching warehouses by the fourth week of November. This follows an earlier price adjustment this year, which saw the 10-cigarette pack increase from ₹115 to ₹125. With the current ₹10 rise, the cumulative increase from the initial ₹115 price point is approximately 17.4%.
Industry Challenges and Financial Impact
The decision to raise prices comes as cigarette manufacturers in India grapple with mounting pressure from higher taxation and a growing disparity between the cost of legally sold cigarettes and cheaper, illicit alternatives. In its commentary for the September quarter, ITC had highlighted concerns regarding potential shifts in consumer volumes towards unregulated products, which pose a significant challenge to the legal cigarette industry.
These industry-wide pressures are reflected in ITC's recent financial performance. The company's cigarette business reported a 27.2% year-on-year decline in profit, falling to ₹3,813 crore in the September quarter compared to ₹5,241 crore in the same period last year. Net revenue from the cigarette segment also saw a 21% decrease during this quarter. Overall, ITC's net profit for the September quarter declined by 20.1% year-on-year to ₹4,137.12 crore, although total revenue increased by 1.8% to ₹18,401 crore, partly cushioned by strong revenue growth in its fast-moving consumer goods (FMCG) business.