Shares of VST Industries Ltd continued to decline on Wednesday, falling by about 5.7% to ₹297.65 on the NSE, extending losses to over 7% in just two days. The stock slipped as market participants reacted to reports that the government is considering replacing the compensation cess on tobacco products with a health and green cess after March 2026.
Currently, cigarettes and other tobacco products attract a 28% GST plus a compensation cess, bringing the total tax burden to approximately 53%. The compensation cess is slated to expire on March 31, 2026. Reports indicate that a Group of Ministers, led by Minister of State for Finance Pankaj Chaudhary, is evaluating options for extending or replacing the levy to ensure revenue continuity.
This regulatory uncertainty weighed on tobacco stocks broadly. While VST Industries fell sharply, shares of Godfrey Phillips India dropped nearly 2%, and ITC was also down marginally at 0.82%.
VST Industries’ price action also coincided with the last session for investors to buy shares in order to qualify for the announced dividend before the stock turns ex-date, which may have influenced some selling pressure as well.
On Wednesday, the stock traded between ₹297.05 and ₹303.00, compared to its previous close of ₹315.70. Its market capitalization stands at ₹50.46 billion, with a P/E ratio of 17.41 and a dividend yield of 3.36%.
