Godfrey Phillips India: 3 Reasons Why the Cigarette Stock Fell 12% Today

Synopsis :- Tobacco stock fell 12% as investors booked profits after a 31% rally in recent sessions, with high sector volatility and overbought technical signals prompting short-term traders to exit positions.

One of India’s leading FMCG companies has grabbed market attention today after its shares dropped sharply by 12 percent, raising concerns among investors and analysts about the factors driving this sudden decline in a stock that has traditionally shown steady performance.

With the market capitalization of Rs. 34,376.82 crore, the shares of Godfrey Phillips India Limited were trading at Rs. 2,203.90, down by 11.41 percent from its previous day’s close price of Rs. 2,487.80 per equity share. The stock has touched an intraday low of Rs. 2,180, implying a decrease of 12.37 percent from previous day’s close price. Below are the reasons why Godfrey Phillips India shares fell 10 percent today:

1. Profit Booking After Strong Rally

Godfrey Phillips India Limited fell by 10 percent after a sharp rally of around 31 percent in 3–4 trading sessions, from Rs. 2,010 on February 16, 2026, to a high of Rs. 2,635 on February 19, 2026. The initial surge was driven by reports of price increases to counter higher taxes levied on tobacco products during the recent budget, which boosted investor sentiment. The recent decline reflects profit booking by short-term traders after the strong run-up.

2. Broader Market and Sector Influence

Tobacco stocks like Godfrey Phillips, with a one-year beta of 1.32, tend to be more volatile compared to the broader market. On days when certain sectors underperform or indices fluctuate, high-beta stocks experience sharper swings, contributing to the 10 percent drop.

3. Technical Factors

From a technical perspective, the stock was trading below key moving averages such as the 50-EMA and 200-EMA, while the Relative Strength Index (RSI) approached 70, indicating overbought conditions. Such technical signals often prompt short-term traders to exit positions, adding to the downward pressure.

About the Company & Financial

Godfrey Phillips India Limited is an Indian company, established in 1936, that manufactures and trades cigarettes, tobacco products, and related items domestically and internationally. It offers cigarette brands such as Marlboro, Four Square, Red & White, Stellar, and others, along with leaf and cut tobacco under multiple global brands. The company also produces confectionery products like candies and chewing gums under the Funda and Naturalz Imli brands.

A return on equity (ROE) of about 19.9 percent, a return on capital employed (ROCE) of about 26.3 percent and debt to equity ratio at 0.03 demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 26.4x higher as compared to its industry P/E 23.8x.  

The company reported a robust performance in Q3FY26, with revenue reaching Rs. 1,829 crore, up 15.1 percent YoY from Rs. 1,589 crore in Q3FY25 and 41.9 percent QoQ from Rs. 1,289 crore in Q2FY26. The growth was driven by strong demand across its energy measurement and metering solutions segments.

EBITDA for the quarter rose to Rs. 380 crore, reflecting a 5.3 percent YoY increase over Rs. 361 crore in Q3FY25 and a 21.0 percent QoQ rise from Rs. 314 crore in Q2FY26. The improvement indicates better operational efficiency and higher contribution from high-margin projects.

Net profit stood at Rs. 343 crore, up 8.5 percent YoY from Rs. 316 crore in Q3FY25 and 12.5 percent QoQ from Rs. 305 crore in Q2FY26. The company continues to benefit from its transition toward service-oriented offerings and Advanced Metering Infrastructure projects, which are contributing to both scale and profitability.

Over the past three years, the company has demonstrated strong growth, achieving a revenue CAGR of 14 percent, a profit CAGR of 24 percent, and a price CAGR of 52 percent reflecting its operational performance and market confidence.

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