Best Tobacco Stocks in India
(The stocks mentioned in the blog are as per Market Capitalization)
In India, the tobacco industry plays a vital role in the growth and development of the economy. Despite facing numerous challenges related to health issues and increased government regulations, investing in tobacco stocks in India has been an attractive option for many.
Tobacco Industry in India - A Brief Overview
As the world's 2nd-largest producer, the tobacco industry in India employs an estimated 4.57 crore people. Cigarettes dominate the tobacco consumption landscape, constituting over 90% of usage in the country and serving as the primary product within India's tobacco market.
Tobacco companies in India have consistently witnessed remarkable growth over the years, yielding substantial profits. The industry's sheer magnitude is poised to expand further, with a projected compound annual growth rate (CAGR) of 11.94% by 2028. Gujarat and Andhra Pradesh emerged as the primary states for tobacco production, benefiting from favourable weather conditions.
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Top Tobacco Stocks in India in 2024 as per Market Capitalisation
The table below mentions the top tobacco companies in India in 2024 based on market capitalisation:
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*Our stock selection criteria for top stocks based on Market Capitalisation are mentioned at the bottom of this blog. |
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Overview of Best Tobacco Stocks in India as per Market Capitalisation
Here is a comprehensive overview of the best tobacco stocks in India 2024 as per market capitalisation:
1) ITC
ITC, initially known as the Imperial Tobacco Company when it was founded in 1910, started its journey solely as a tobacco company, producing cigarettes and other tobacco products.
Over the years, it has grown into a major player in India's Fast-Moving Consumer Goods (FMCG) sector and a global conglomerate. Today, ITC dominates the Indian cigarette market and boasts a diverse portfolio of brands such as Insignia, India Kings, Classic, Gold Flake and many more.
Despite its roots in tobacco, ITC has expanded into various sectors, including hospitality, paperboards, packaging and agri-business. Its cigarettes are manufactured in modern facilities across India, employing advanced technology and top-notch practices aligned with global standards. Even in international markets, ITC maintains high-quality standards and remains competitive in the cigarette business.
2) Godfrey Phillips India
Founded in 1936, Godfrey Phillips India Limited, the flagship company of Modi Enterprises, is one of India's largest FMCG companies. It is known for producing popular cigarette brands like Four Square, Red and White, Cavanders, Tipper, and North Pole. Additionally, it holds a licence agreement with Philip Morris to manufacture and distribute the iconic brand Marlboro.
The company also operates in the confectionery business and trades unmanufactured tobacco.
Godfrey Phillips India's retail chain, 24Seven, operates as a round-the-clock convenience store format with over 145 stores/kiosks across Delhi NCR, Punjab and Telangana. Expanding beyond cigarettes and tobacco, Godfrey Phillips India has entered into the competitive confectionery segment and retail business, broadening its product offerings.
3) VST Industries
Formerly known as the Vazir Sultan Tobacco Company Limited, VST Industries Limited was established on November 10, 1930. It changed its name on April 30, 1983. The company is based in Hyderabad and is involved in producing and trading cigarettes and tobacco products. Its brands include Editions, Charms, Special, Moments, Total Royal Twist, Total Active Mint, etc.
The company operates in the tobacco and related products segment. It has 2 manufacturing facilities in Hyderabad and Toopran. Additionally, it has 6 regional offices in Hyderabad, Kolkata, Chennai, Mumbai, Delhi and Guwahati.
4) Indian Wood Products Company Limited
Established in 1919, Indian Wood Products Company Limited is a Katha and Cutch product manufacturing company. The company mainly focuses on producing, processing, and marketing high-quality Katha (Catechu) and Cutch.
Catechu products are used as mouth fresheners, containing chewing tobacco and areca nuts, and are utilised for treating dysentery, acute viral hepatitis, diarrhoea, ailments of the mouth, tonsils, etc. The company’s Cutch is a by-product of Katha. It is used as a vegetable tanning material or as an additive or preservative in various industries.
Indian Wood Products Company Limited mainly operates in 2 segments, i.e. spices and other products. These segments include products like dhania, mirch, haldi, sabzi masala, garam masala, etc.
5) NTC Industries
Headquartered in Kolkata, NTC Industries is one of India’s oldest manufacturers of cigarettes and smoking mixtures. This brand has a huge presence in the domestic and international markets. It also supplies products like incense sticks and matchsticks which are necessary in daily lifestyle. NTC Industries provides its products under 2 segments, tobacco and lifestyle.
Its tobacco product segment consists of brands like GOLDMAN, Prestige, General, FX, Elpatron, Aadie, Valentino, Patroncito, Marley, DOS II, DOS, Jaipur, Royal King, MayPole and Golden.
Its lifestyle products include Agardeep incense sticks and Regent matchboxes. NTC Industries' other flavours include One8 dual flavour, Regent Black and Regent Flake. Additionally, it also exports products internationally to places like Rotterdam, Amsterdam, Brussels and Luxembourg.
Factors to Consider Before Investing in Tobacco Stocks in India
When considering investing in the tobacco stocks in India, you need to take the following factors into account:
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Government Regulations
Governments are making strict rules for cigarette products. You must consider how these changes might affect the sector and impact potential earnings.
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Financial Health
Check the company's financial performance, like quarterly reports, sales, profits, debt levels, and cash flow, to understand its stability. Additionally, consider the company's history of paying dividends and its potential for future growth.
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Competition
The cigarette industry faces tough competition from both local and international companies. Before investing, you must look at the company's market share and long-term strategies.
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Market Demand
Tobacco usage is decreasing in many countries. Therefore, you must think about how this declining demand might affect the company's earnings before investing.
Should You Invest in Tobacco Stocks?
Putting your money into tobacco companies comes with its fair share of risks. These include government regulations, health worries, tough competition and the possibility of facing legal action. Government rules can affect how much the industry can grow, and increased health awareness could mean fewer people buying tobacco products.
Additionally, with so many competitors in the industry, it is tough for some companies to stand out and do well. On top of all that, there is the risk of getting sued over health concerns linked to tobacco use. Therefore, you should invest in tobacco stocks only after carefully considering the associated risks.
The Bottom Line
The tobacco industry is highly profitable in India and ranks second globally in both production and consumption. However, it is in your best interest to research and seek advice from a financial advisor before making investment decisions.
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Statutory Warning: Tobacco consumption and smoking are harmful to health. We don't encourage the consumption of the same. |
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*Stock Selection Criteria for Top Stocks Based on Analyst Rating Investors must carefully read through the following information on stock selection criteria while running through the stocks based on analyst ratings- These stocks have been shortlisted as per Analyst ratings provided by the I/B/E/S (The Institutional Broker’s Estimate System) database, further aggregated by Refinitiv. Ratings are determined by analysts' forecasts of company performance, taking into account metrics like earnings per share, sales, and net income. These ratings should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.). Before investing, investors must conduct independent research and not solely rely on the information provided here. This will allow investors to make appropriate investment decisions based on their financial goals, investment objectives and risk tolerance. |
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*Stock Selection Criteria for Top Stocks Based on Market Capitalisation These stocks are chosen based on their market capitalization, which represents the total value of a company's outstanding shares. The selection is arranged in descending order, placing the largest companies first and the smaller ones later. This helps prioritize stocks based on their market size. It is important to note that market capitalization in no way guarantees a company’s performance or the returns from its stocks. However, it can be used as a criterion for shortlisting companies from within a sector. Investors should recognize that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. This stock selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.). |
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Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory. To read the RA disclaimer, please click here |