Market Brief: Tobacco Sector Surge The Indian tobacco sector is witnessing a significant valuation rally as leading manufacturers implement aggressive pricing strategies. **Godfrey Phillips India** shares have skyrocketed, recording a **31% gain** over a three-day winning streak ending **February 19, 2026**. The stock hit an intraday high of **₹2,635**, supported by a massive surge in delivery volumes that reached **17.57 lakh shares**, a twelvefold increase over the recent average. This momentum follows the implementation of the new tobacco tax regime on **February 1, 2026**. The government has overhauled the fiscal structure, replacing the previous **28% GST** and compensation cess with a unified **40% GST** and a restructured excise duty. These specific duties now range from **₹2,050 to ₹8,500** per 1,000 sticks, tiered strictly by cigarette length. To preserve margins against these higher levies, companies have initiated price hikes ranging from **20% to 40%** across product portfolios. **Godfrey Phillips** has notably increased the price of **Marlboro Compact** from **₹9.5** to **₹11.5** per stick. Market leader **ITC** is also adjusting rates upward, with its shares rebounding roughly **7%** from February lows to trade near **₹330**. Analysts estimate that these tactical price adjustments will mitigate projected earnings declines. While early forecasts suggested an **8% to 15%** drop in EBIT due to the tax burden, recent pricing actions are expected to contain the decline to approximately **2%**. Retailers are currently capitalizing on the transition by selling existing inventory at the new, higher rates. Popular mid-sized brands like **Wills Navy Cut** have seen pack prices jump from **₹95** to **₹120**, while premium variants such as **Gold Flake Lights** and **Wills Classic** are now retailing between **₹220 and ₹225** per pack of 10. Despite the sharp increase in consumer costs, the sector has shown historical resilience. **Godfrey Phillips** reported a **25%** volume growth in domestic cigarette sales for the first nine months of the fiscal year, with consolidated net profit reaching **₹1,005 crore**. Investor interest remains high as the industry demonstrates strong pricing power, effectively passing on the tax burden to consumers to stabilize long-term profitability.