Last Updated on Sep 30, 2024 by Anjali Chourasiya
Tobacco stocks in India have always attracted a certain level of attention from investors due to the industry’s deep-rooted presence in the country’s economy. India is one of the largest producers of tobacco globally, with the tobacco industry contributing significantly to both employment and revenue. If you are wondering how to navigate the world of tobacco stocks in India, you are not alone. Many investors look for opportunities in this sector, curious about which are the best tobacco stocks to invest in India. This guide aims to give you a comprehensive understanding of tobacco stocks, factors you can consider, and how to assess whether these investments align with your portfolio goals.
Table of Contents
What Are Tobacco Stocks?
Tobacco stocks refer to the shares of companies involved in the production, distribution, and sale of tobacco products such as cigarettes, cigars, and other tobacco-based goods. In India, tobacco companies have a well-established presence, with some companies not only dominating the domestic market but also exporting to international markets. Among the key players, companies like ITC (Indian Tobacco Company) are often in the spotlight. If you are thinking about investing in tobacco stocks in India, it may be important to note that tobacco stocks are often considered defensive stocks, meaning they tend to maintain stability even when the broader market is volatile.
List of Tobacco Companies in India
| Name | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | 1Y Return (%) | Net Profit Margin (%) |
| ITC Ltd | 653,772.18 | 518.15 | 31.96 | 17.83 | 27.78 |
| Godfrey Phillips India Ltd | 36,237.60 | 6,977.60 | 41.04 | 224.83 | 18.28 |
| VST Industries Ltd | 6,459.61 | 375.40 | 21.42 | 22.35 | 20.10 |
| NTC Industries Ltd | 249.63 | 211.40 | 49.33 | 144.36 | 10.21 |
| Golden Tobacco Ltd | 74.33 | 42.79 | 9.74 | -21.41 | 16.63 |
| Sinnar Bidi Udyog Ltd | 29.75 | 736.25 | 270.42 | 56.87 | 2.16 |
Note: The data is from . The following parameters are used on the Tickertape Stock Screener to get the list of tobacco companies in India –
Sector > Consumer Staples > FMCG – Tobacco
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Overview of the All Listed Tobacco Stocks in India
ITC Ltd
Founded in 1910, ITC Ltd is one of India’s most prominent conglomerates, with its roots in the tobacco sector. Over the years, ITC has diversified into sectors such as FMCG, hotels, paperboards, packaging, and agriculture. It is best known for its consumer brands such as Aashirvaad, Sunfeast, and Savlon. Despite its diversification, ITC remains a significant player in the tobacco market. ITC Ltd has a market capitalisation of Rs. 653,772.18 cr., making it the largest company in this list in terms of market value.
Godfrey Phillips India Ltd
Established in 1936, Godfrey Phillips India Ltd is one of India’s leading cigarette manufacturers and a part of the K.K. Modi Group. The company is known for producing popular cigarette brands like “Four Square” and also has a presence in chewing products and confectionery. It operates both in the Indian market and in select international markets. Godfrey Phillips India Ltd has a market capitalisation of Rs. 36,237.60 cr. In addition to this, it has recorded the highest 1-year return of 224.83% among the companies listed.
VST Industries Ltd
VST Industries Ltd, founded in 1930, is a well-established tobacco company primarily known for its cigarette brands “Charms” and “Charminar.” Headquartered in Hyderabad, the company has a strong presence in the Indian market and exports its products internationally. VST Industries Ltd has a market capitalisation of Rs. 6,459.61 cr., reflecting its stable, mid-sized position within the tobacco industry.
NTC Industries Ltd
Founded in 1931, NTC Industries Ltd is a smaller player in India’s tobacco sector, primarily involved in the manufacturing and sale of cigarettes and other tobacco products. Despite its modest scale compared to its peers, NTC has seen significant growth over the past year. NTC Industries Ltd has a market capitalisation of Rs. 249.63 cr., making it one of the smaller companies on this list.
Golden Tobacco Ltd
Golden Tobacco Ltd, established in 1930, is one of India’s older tobacco manufacturers, known for producing a variety of tobacco products, including cigarettes and cigars. In recent years, the company has struggled to maintain its market position. Golden Tobacco Ltd has a market capitalisation of Rs. 74.33 cr., reflecting its smaller size and declining market performance.
Sinnar Bidi Udyog Ltd
Founded in 1974, Sinnar Bidi Udyog Ltd is a small tobacco company that focuses primarily on the production of bidis, a traditional Indian hand-rolled cigarette made from tendu leaves. The company operates in a niche market, catering to traditional consumers of tobacco products. Sinnar Bidi Udyog Ltd has a market capitalisation of Rs. 29.75 cr., making it the smallest company on this list.
How to Invest in Tobacco Stocks in India?
To invest in the best tobacoo stocks to invest in India, follow these steps.
Step 1: Launch Tickertape Stock Screener.
Step 2: Go to ‘Sectors’ and Select -> Consumer Staples > FMCG – Tobacco
Step 3: Add over 200 filters to narrow down the tobacco shares list.
You can choose fundamental filters like ROE, Net Profit Margin, or Debt-to-Equity Ratio. You can also select technical filters like RSI. The selection criteria of filters depend on your preference. While thorough research on tobacco company shares is important, it is worthwhile to consult a professional before investing.
How to Identify Tobacco Stocks?
If you want to identify tobacco stocks in India, you can use the Tickertape Stock Screener. This tool helps you filter stocks based on specific criteria such as revenue, market capitalization, profitability, and industry. For tobacco company stocks, you can filter by industries such as tobacco manufacturing or FMCG to identify top players in the market. Below are some key steps you can follow:
- Use Stock Screeners: Platforms like Tickertape allow you to set parameters such as sector, financial metrics, and historical performance to identify the best tobacco stocks.
- Focus on Major Players: Look at prominent companies that are deeply involved in tobacco products in India.
- Research Market Leaders: Many of the top 10 tobacco companies in India also have diversified business models, so consider their revenue breakdown from different segments.
Factors to Consider When Investing in Tobacco Stocks
While tobacco stocks in India might seem lucrative, there are several factors that you may want to consider before making an investment:
- Regulatory Environment: The tobacco industry in India is subject to strict regulations regarding advertising, distribution, and packaging. Regulatory changes could affect the performance of tobacco stocks.
- Taxation: The tobacco sector is heavily taxed, with the government regularly increasing excise duties on tobacco products. High taxes can impact the profitability of cigarette companies in India.
- Public Health Concerns: Increasing awareness about the health risks associated with tobacco use could reduce demand for tobacco products in the long term.
- Global Presence: Companies involved in tobacco export from India may have a broader revenue base, helping them mitigate risks posed by domestic challenges.
- Market Demand: Monitoring the market demand for both domestic and international sales of Indian tobacco products can help you assess the company’s long-term viability.
- Geographical Distribution: Knowing about the largest tobacco producing states in India and their contribution to a company’s revenue may provide an edge in your analysis. For instance, Andhra Pradesh and Gujarat are among the largest producers of tobacco in India.
Who Can Invest in Tobacco Stocks?
Tobacco stocks may appeal to investors looking for long-term, stable returns. These stocks are often categorized as ‘defensive’ because the demand for tobacco products tends to remain stable, irrespective of economic downturns. However, you can weigh the ethical considerations of investing in tobacco stocks, especially given the health implications associated with tobacco use. Some investors may choose to avoid this sector for moral reasons, while others view it as a financially sound investment due to the consistent demand for tobacco products.
If you are an investor comfortable with the ethical and regulatory landscape of the tobacco industry in India, you can explore tobacco company stocks as part of a diversified investment portfolio. Given the large contribution of the tobacco industry to India’s economy, certain mutual funds and institutional investors may also hold stakes in prominent tobacco companies.
Tobacco Industry in India
The tobacco sector is one of India’s oldest sectors, contributing Rs. 11,79,498 cr. to the Indian economy. Being the second largest tobacco producer in the world, the tobacco companies in India employ an estimated 4.57 cr. people. Cigarettes account for over 90% of tobacco consumption in the country and represent the primary product within the Indian tobacco market.
The tobacco companies in India have experienced exponential growth consistently over the years and have generated significant profits. It is expected that the sheer size of the tobacco industry will grow even more as the sector is forecasted to grow at a CAGR of 11.94% by 2028.
Despite the stringent regulations around tobacco stocks in India, the tobacco share prices are not very much affected. On the contrary, considering the potential for substantial financial gains and the consistent profitability of tobacco companies, tobacco company stocks have prompted investors to include them in their investment portfolios.
But here’s a catch: Besides complying with government regulations, the tobacco companies in India also face strict competition from foreign companies. Moreover, with some countries forcing a ban on tobacco usage, it casts a shadow on India’s reputation as the third-largest tobacco exporter.
Therefore, before exploring the stocks of tobacco companies, it is essential to do your due diligence. For that matter, there isn’t a better stock screener than Tickertape. With real-time updates, you can screen tobacco stocks on over 200 filters to identify stocks based on your financial goals. If you’re new to Tickertape Stock Screener, here’s a complete guide on discovering stocks – How to Use Tickertape Stock Screener.
Conclusion
Tobacco stocks in India may offer a unique blend of stability and growth potential. While the Indian tobacco industry continues to face scrutiny due to health concerns and regulatory challenges, companies within the sector have historically demonstrated resilience. If you are interested in investing in tobacco stocks in India, keeping an eye on regulatory changes, taxation policies, and market demand will help you make more informed decisions. As with any investment, a thorough analysis of the company’s financials and market position is critical to understanding its potential.
FAQs on Tobacco Stocks in India
Which are the largest tobacco companies in India?
The largest tobacco companies in India include ITC Limited, which dominates the market with a significant share, and Godfrey Phillips India, another major player in the industry. Both companies are key contributors to the tobacco sector in India as per their market cap.
Which state is the largest producer of tobacco in India?
Andhra Pradesh is considered the largest producer of tobacco in India.
Are tobacco stocks considered good for long-term investments?
Tobacco stocks may provide stable returns over the long term due to consistent demand, but you should be cautious about regulatory and ethical factors.
Is tobacco production in India regulated by the government?
Yes, tobacco production and sale are highly regulated in India, with strict laws governing advertising and taxation.
Can retail investors invest in Indian tobacco stocks?
Yes, retail investors can invest in Indian tobacco stocks by purchasing shares through the stock exchanges.
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As an investment fanatic, I’ve dabbled in early-stage startups, mutual funds, gold, stocks, smallcases, and real estate to identify which assets generate the highest ROI. At Tickertape, I’m dedicated to presenting my learning and providing insightful suggestions to help my readers make sound investment decision.
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