Best Tobacco Stocks in India – Industry Overview & Complete List

best tobacco stocks  in India
Best tobacco stocks

Despite its criticism sin stocks have always attracted abundant investment, and this is primarily because of the potential their products have held despite the curbs placed by the government, therefore in this article, we take a look at another sin sector the Indian tobacco industry and also take a look at the Best Tobacco stocks in India.

Overview of the Tobacco Industry

As one of the most economically significant agricultural crops in the world, and tobacco is a general term given to products prepared from the cured leaves of plants belonging to the Nicotiana genus, while India stands behind China & Brazil, therefore it is one of the largest producers and exporters of this product, while tobacco consumed in any form poses health risks & complications that affects a large population of passive smokers, whereas the highly addictive alkaloids present in tobacco make it hard to quit, but despite these health issues the tobacco industry is flourishing due to its economic importance, and it is mainly produced in the southern states of Karnataka and Andhra Pradesh in India, where the weather is suitable for the crop to grow, while smoking tobacco in India is known for its quality & places the country in the leading revenue earning bracket worldwide, while most of the tobacco is processed into cigarettes, whereas the leftovers are used to make the popular bidi, where tobacco is wrapped in tendu leaves, while smokeless tobacco has been quite popular in the country for centuries with variants of chewing and snuffing tobacco products, therefore due to this easy access and low cost of these particular products, products such as paan/pan, gutka, and flavored tobacco are widely consumed by young and old alike, but unfortunately this makes for distinct red paan stains on walls all over the country, whereas variety of bidis & smokeless tobacco products are made in cottage industries without warnings on the packaging and sold in family-owned shops and stalls, while furthermore at least 75 percent of cigarettes are sold as single sticks, so buyers don’t see the warnings on the packet, its consumption has been reduced significantly in the country, but despite this it is still used by 275 million people, and as society liberalizes more women are taking up smoking, whereas series of legal precautions and warnings came into effect at the turn of the millennium, and that started with banning advertising of tobacco and alcohol use, followed by mandatory pictorial warnings on products, whereas Supreme Court judgment in 2001 banned smoking in public spaces in the country, and a series of governmental anti-tobacco advertisements followed this messaging, while theier are public spaces and restaurants that have designated areas for smoking, whereas the ban on the sale, manufacture, distribution, and storage of gutka and all its variants was implemented in May 2013 and consequent notifications have enforced a strict ban on all smokeless tobacco products, and the number of legal cigarettes has now been decreased while the illegal cigarette trade has increased dramatically due to high cigarette taxes and strict tobacco control laws like India’s 85 percent pictorial warning on tobacco product packs.

Top Tobacco Stocks in India

  • ITC Ltd

It is an India-based holding company, and the Company operates through four segments, which are FMCG (fast moving consumer goods), Hotels, Paperboards, Paper and Packaging and Agri-Business, while the FMCG segment includes Cigarettes, such as cigarettes, cigars & others, such as branded packaged foods businesses, education and stationery products; personal care products; safety matches and agarbattis and apparel, while its Hotels segment includes Hoteliering, its Paperboards, Paper & Packaging segment includes Paperboards, Paper including Specialty Paper and Packaging including Flexibles, its Agri Business segment includes Agri commodities such as soya, spices, coffee, & leaf tobacco, and its Other segment includes information technology services and branded residences, while its brand includes Aashirvaad, Bingo, Candyman, Fiama, Vivel, Classmate, Superia, Engage, Mangaldeep, Aim and Homelites.

  • Market Cap=- ₹ 407,729 Cr.
  • Current Price- ₹ 329
  • High / Low- ₹ 330 / 207
  • Stock P/E- 24.9
  • Book Value- ₹ 50.7
  • Dividend Yield- 3.50 %
  • ROCE- 33.6 %
  • ROE- 24.8 %
  • Face Value- ₹ 1.00
  • Godfrey Phillips India Ltd

It is an India-based company, which is engaged in the manufacturing of cigarettes, tobacco products, and chewing products and in the trading of tobacco products and other retail products, the segments of the company include Cigarette, tobacco, and related products; and Retail and related products, they offer cigarette under various brands, including Marlboro, Four Square, Red & White, Cavanders, Stellar and North Pole and Tipper, and it offers chewing products under various brands, including Pan Vilas, Pan Vilas Silver Dewz and Raag, their retail brand is 24SEVEN, which is a convenience store chain with approximately 100 stores across Delhi National Capital Territory (NCR) and Chandigarh, and it offers confectionery products under Funda Goli brand, which consists of flavors, such as tangy orange to rasili lychee, kaccha aam, mast guava, and green apple, they manufacture composite leaf blends and cut tobacco, and also offer Roll-your-own (RYO) cigarettes.

  • Market Cap- ₹ 5,509 Cr.
  • Current Price- ₹ 1,060
  • High / Low- ₹ 1,410 / 933
  • Stock P/E- 11.8
  • Book Value- ₹ 563
  • Dividend Yield- 2.64 %
  • ROCE- 16.7 %
  • ROE- 13.6 %
  • Face Value- ₹ 2.00
  • VST Industries Ltd

It is an India-based company, which is engaged in the manufacturing & trading of cigarettes containing tobacco and unmanufactured tobacco products, the Company operates through Tobacco and related products segment, while its brands include Total, Editions, Charms, Special, and Moments, whereas to produce all their products the Company operates two manufacturing plants with one located in Hyderabad, Telangana and second plant in Toopran, Telangana

  • Market Cap- ₹ 4,952 Cr.
  • Current Price- ₹ 3,200
  • High / Low- ₹ 3,895 / 2,786
  • Stock P/E- 14.7
  • Book Value- ₹ 696
  • Dividend Yield- 4.38 %
  • ROCE- 42.4 %
  • ROE- 31.7 %
  • Face Value- ₹ 10.0
  • Golden Tobacco Ltd

It is an India-based company that is engaged in the business of manufacturing tobacco products and real estate, the Company’s segments are Tobacco Products, Realty, and Others, and the Company’s products include cigarettes, slim / super slim cigarettes, cigars, cigarillos, and tobacco, as its cigarettes include Panama Mini Kings Special, Panama Filter, Chancellor Select Filter, Panama Menthol, Style Mini King, Panama Virginia, Panama Virginia Regular, Taj Chhap Deluxe, Chancellor Blue, Golden’s Gold Flake, Chancellor Exclusive Filter, and Chancellor Special Filter, whereas it’s slim/super slim cigarettes include June Slim, June Super Slim and Lips, and its cigars include Just Black, Lips (In Barrel n Caps) and June Slim Cigars, while it also offers Just Black cigarillos, whereas to sell all their products the Company exports them to the United States, Europe, Russia, Singapore, Cambodia, Japan, Middle East, and others.

  • Market Cap- ₹ 155 Cr.
  • Current Price- ₹ 89.9
  • High / Low- ₹ 191 / 76.0
  • Stock P/E- 29.3
  • Book Value- ₹ -117
  • Dividend Yield- 0.00 %
  • ROCE%-
  • ROE%-
  • Face Value- ₹ 10.0

Conclusion

The Indian tobacco industry comes with a multitude of challenges with several organizations set up specifically to be able to limit the use of its products, also the government in particular is setting up new challenges to curb its use, so investors must take note of this before making significant investments in tobacco companies.

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