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Best Tobacco Stocks In India In 2023

01 Dec 2023

Introduction:

The Indian tobacco industry is one of the most flourishing industries worldwide. Despite the criticism, it has contributed significantly to the country’s economy and attracted considerable global investments. As a retail investor, you can also benefit from the projected growth of tobacco companies in India by investing in their shares.

In this article, you’ll find a list of India's top five tobacco stocks in which you can invest in 2023. These stocks belong to companies that produce and market tobacco products, such as cigarettes, cigars, snuff, and chewing tobacco. 

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Best Tobacco Stocks in 2023

1. ITC Limited

Although ITC has evolved into a global conglomerate and one of India's leading Fast-Moving Consumer Goods (FMCG) companies, it started its business as a tobacco company. Established in 1910 as Imperial Tobacco Company, ITC initially produced only cigarettes and other tobacco products. Even today, it enjoys a monopoly in the Indian cigarette market.

It has also ventured into other sectors, including hospitality, paperboards, packaging, and agri-business. Over the last five years, the company’s revenue has grown at a rate of 7.02%. As of 11 July 2023, ITC’s market capitalisation stood at Rs. 5,89,131 crores. Its shares were trading for Rs. 472.25 per share at the National Stock Exchange (NSE) and Rs. 472.80 per share at the Bombay Stock Exchange (BSE).

2. Godfrey Philips India Limited

Godfrey Philips was originally a London-based cigarette-manufacturing company that was founded in 1844. Its Indian subsidiary – Godfrey Philips India – started its operations in 1936. Apart from the production of cigarettes and cigars, the company is also engaged in the business of pan masala, chewing tobacco, and confectionery products. Its profits have grown at a healthy rate of 33.26% in the last three years.

As of 11 July 2023, Godfrey Philips’ shares were trading for Rs. 1,647.15 per share at the NSE and Rs. 1,649.65 per share at the BSE. These shares have given a return of 53.52% in the last year. The market capitalisation of the company stood at Rs. 8,639 crores.

3. VST Industries Limited

Established in 1930, VST Industries Limited is a British American Tobacco (BAT) company subsidiary. It has its headquarters in Hyderabad, Telangana, and is among the oldest tobacco companies in India.

VST Industries Ltd. is engaged in the manufacturing and marketing of cigarettes and other tobacco products. It has recently ventured into other businesses, including real estate and hospitality. The best-selling brands of the company include Charminar, Charms, and Moments.

As of 11 July 2023, the shares of VST Industries Limited were trading for Rs. 3,594.50 per share at the NSE and Rs. 3,594.05 per share at the BSE. The company’s profits have grown at a rate of 12.18% in the last three years. Its market capitalisation stood at Rs. 5,5251 crores.

4. The Indian Wood Products Company Limited

The Indian Wood Products Company Limited is a Bengaluru-based company engaged in manufacturing and exporting premium wooden goods. Since its incorporation in 1969, this company has become a dominant player in the Indian timber industry. Besides, it is also engaged in the production, processing, and marketing of Katha – an ingredient used in Paan and tobacco products.

As of 11 July 2023, the company’s market capitalisation stood at Rs. 151 crores. Its shares are listed only on the Bombay Stock Exchange and were trading for Rs. 23.80 per share. 

5. Golden Tobacco Limited

Golden Tobacco was incorporated in 1955 and is one of India’s top tobacco companies. It produces and markets a range of tobacco products, including cigarettes, chewing tobacco, and others. The company's top-selling brands include Chancellor, Taj Chaap, and Panama. Like other companies on this list, the profit margins increased between 2017 and 2019 before witnessing a slowdown due to the Covid-19 pandemic.

As of 11 July 2023, the market capitalisation of the company stood at Rs. 74 crores. Its shares were trading for Rs. 41.80 per share at the NSE and Rs. 41.20 per share at the BSE. In the last three years, Golden Tobacco’s shares have given a return of 65.18%.

The closing lines

The tobacco business is among the most profitable businesses in India. We are the second-largest producer and consumer of tobacco worldwide. Hence, investing in the tobacco stocks in India mentioned above makes sense.

However, the tobacco industry is highly regulated by the Government, and the companies engaged in this business face challenges on several fronts. Therefore, you must analyse the risk-reward scenario carefully before investing. If you need a Demat account to start your stock investment journey, you can open it for free with Motilal Oswal.

 

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