The central government has not increased excise duty on cigarettes in this year’s budget. However, states have raised value added tax (VAT) unevenly. Northern states like Rajasthan raised VAT sharply, while southern states avoided major hikes. Other tobacco products such as pan masala and chewing tobacco faced higher taxes and raw material costs. Tobacco prices stayed mostly steady, but the cost of tendu leaves used for making beedis soared. The cigarette industry used this chance to attract beedi smokers by offering low-end and micro filter cigarettes at competitive prices. Also, the government decided to place less graphic pictorial warnings on cigarette packs, which helped improve market sentiment. In the quarter ending June, VST Industries reported a 90% jump in net profit compared to last year. ITC is expected to show increased cigarette sales despite some price rises. Experts believe cigarette firms will continue to grow strongly, driven by more sales, higher prices, and lower costs. The stock rally in cigarette companies looks set to continue as market factors remain favorable.