Best Tobacco Stocks in India – Industry Overview & Complete List

India is the world's second-largest tobacco exporter, trailing only Brazil. During the fiscal year 2021, total exports were $923.8 million.

Despite these benefits, tobacco companies bring several new issues to the table. The industry frequently encounters obstacles, and its products carry potentially fatal health warnings.

According to studies, tobacco-related deaths are up to three times higher than deaths from other products. Furthermore, the government has been committed to reducing the potential consumption of tobacco by heavily taxing its products.

Tobacco companies are now adapting by expanding into new markets. Companies are now investing billions of dollars in the development of nicotine products that do not pose such health risks.

India's Top Tobacco Stocks

Let us now look at the best tobacco business company to invest in stock.

1. ITC

Today, ITC is the largest player in the Indian tobacco industry. British American Tobacco owns a stake in the company and a 79% share of total sales volumes.

Its cigarette brands include Insignia, India Kings, Classic, Gold Flake, Wills Navy Cut, Players, and Berkeley, among others.

If we look at ITC's financials, we can see that its profits have increased from Rs. 10,289 crores in 2017 to Rs. 15,306 crores in 2020, but its profits fell slightly in 2021 to Rs. 13,161 crores.

Its profits recovered in FY22, with a net profit of Rs 15,243 crores, and it now has a three-year profit CAGR of 6.57%.

2. Godfrey Philips

Godfrey Phillips was founded in India in 1936. Philio Morris, an international conglomerate, took over the company in 1968.

It has enabled the company to sell the world-famous brand Marlboro. The company is now the flagship of the Modi Enterprises group.

Looking at the company's financials, we can see that profits have been steadily increasing, rising from Rs. 137 crores in 2017 to Rs. 385 crore in 2020. Their profit fell slightly in 2021, falling to Rs. 377 crores, but it has recovered with a net profit of Rs 438 crores.

In addition, the company has a healthy three-year profit CAGR of 33.26%. The company has a low debt-equity ratio. It is the best tobacco business company for buying stock.

3. VST Industries

It has headquarters in Hyderabad and was founded in 1930. It is a subsidiary of British American Tobacco (BAT). Total, Charms, Charminar, Editions, Special, and Moments are among the company's brands.

Similar to the other companies on this list, the company's revenues have risen from Rs. 922 crores in 2017 to Rs. 1,239 crores in 2020. It suffered a decline in 2021 and 2022.

Profits have risen steadily, from Rs. 182 crores in 2018 to Rs. 320 crores in 2022. The company's profit CAGR over the last three years has been 12.18%. The company has no debt and a dividend yield of 4.40%.

Conclusion

The Indian tobacco industry faces numerous challenges, with several organizations trying to limit the use of its products. The government is posing new challenges to discourage its use.

Before making massive investments in tobacco companies, investors should keep this in mind.