Best Tobacco Stocks in India 2024

Consumption of tobacco is injurious to health yet we see that it is quite prevalent among different genders of various age groups. One of the main reasons for this has been that it is a byproduct of the habit formation which is a prominent feature of these tobacco products. 

The tobacco industry faces tremendous pressure due to its adverse effects on health and stringent government policies, still it manages to not only survive but come up with an industry which can be an attractive investment option. Let’s take a deeper look into the tobacco stocks in India to find out whether it is as attractive as it looks.

 

 

Overview of the Indian Tobacco industry

India is the 2nd largest producer of tobacco in the world and as an industry it provides employment to around 4.57 crore people in the country. Cigarettes are the dominant force in the tobacco industry among other products constituting around 90% of the total sales in India. According to a 2019-21 National Family Health Survey, it was found out that around 39.1% men and 4.1% women consumed tobacco.  

 

Despite the challenges faced, the tobacco industry in India has shown considerable growth over the years and is expected to grow even further at an estimated CAGR of 11.94 by 2028. India is also the 2nd largest exporter of tobacco in the world after Brazil. In September 2022, India exported tobacco worth USD 125.24 million which was a 72% increase from September 2021. 

 

India is the only country in the globe that produces tobacco twice in a year and exports it to as many as 115 countries in the world including Belgium, Germany, Egypt, Philippines and USA.

 

 

Factors to consider before investing in the India tobacco industry

 

1). Government Policies

When it comes to investing in the tobacco industry, the government rules and regulations is one aspect which must be considered as tobacco is a sensitive issue and the government keeps making entry stringent in this sector by imposing more taxes which can impact the bottom line of companies in a negative sense.

 

2). Financial Strength of a company

Before investing in any company it is always crucial to assess the financial strength of the company by going through its quarterly reports, sales, profits, debt levels, and cash flow. It will allow you to oversee the expected future of the company in terms of growth.

 

3). Market Competition

The market competition in the tobacco industry is very competitive as there is tough competition between local and international companies. Therefore, it is also advisable to assess the market share of a company and look at its competitors before investing in these companies. 

 

4). Future demand

There has been a declining trend in the demand of tobacco across countries which is a factor one must consider before investing in these companies as it has a negative impact on the financials of the companies in this sector.

 

 

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Top companies to invest in tobacco sector in 2024

Here is the list of top 5 stocks in the tobacco industry where you can invest in 2024, if you want to earn attractive returns: but before investing in these stocks it is important to know important ratio in stock market.

Company Name	Last Price	52 wk High	52 wk Low	Market Cap (Rs. cr)
ITC	495	510.65	399.5	620,083
Godfrey Phillip	4,444.55	4,815.00	1,605.05	23,108.96
VST	4,144.10	4,850.00	3,159.90	6,399.29
NTC Industries	254.5	254.5	71.3	303.97
The Indian Wood	38	40.69	21.75	243.1

 

 

1) ITC Limited

Imperial Tobacco Company also known as ITC is India’s top most name of the tobacco industry. The company which was formed in 1910 started its journey as a tobacco company focusing mainly on producing cigarettes and tobacco products.

Over the years as ITC gained prominence it entered into the FMCG sector and left its mark there as well. In today’s time, ITC is not only the major player in the Indian cigarette market but has also diversified its portfolio across different sectors such as hospitality, packaging, paperboards and agri-business. ITC not only has its major presence in India but also exports its products abroad as well which is one of the top performing companies in the Indian tobacco sector. 

 

ITC is the second largest FMCG sector stock in India with market cap of 6.10 lakh crore.

 

 

2). Godfrey Phillips India Limited

Godfrey Phillips India Limited is the flagship company of Modi Enterprises and is among the largest FMCG companies in India. Incorporated in the year 1936, the company is popular for some popular cigarette brands such as FourSquare, Red and White, Cavanders, Tipper, and North Pole. 

It has its presence in the confectionery business and also deals in the trading of unmanufactured tobacco. The company also owns the popular retail chain 24Seven which functions as a 24-hour open convenience store with over 145 stores in the areas of Delhi NCR, Punjab and Telangana.

 

3) VST Industries Limited

Incorporated in 1930, Vazir Sultan Tobacco Company Limited is among the prominent names in the Indian tobacco industry. The company is headquartered in Hyderabad, India and is engaged in the production and trading of cigarettes and tobacco products. 

The company has some prominent brands under its banner such as Editions, Charms, Special, Moments, Total Royal Twist, Total Active Mint and more. The company owns 2 production units in Hyderabad and Toopran and operates from 6 regional offices across India.

 

4) India Wood Products Company Limited

India Woods Products Company Limited which manufactures Katha and Cutch products came into existence in 1919. The company primarily engages in the production, processing and marketing of Katha and Cutch which is of the highest quality. 

Catechu is a versatile natural product which has been in use for centuries and was the main ingredient in mouth fresheners, often mixed with ingredients like tobacco and areca nut. Beyond oral care, catechu has shown potential benefits in treating various ailments including digestive issues and throat infections.

A byproduct of catechu, called cutch, has found its place in different industries. It's widely used in leather tanning to give it that distinctive look and feel. Additionally, cutch is added to various products as a preservative or additive. The business of the company is divided mainly into two segments: Spices and other products and includes products such as dhania, mirch, haldi, sabzi masala, garam masala, etc.

 

 

5) NTC Industries Limited

NTC Industries is one of the most prominent and oldest tobacco companies of India based in Kolkata. It primarily deals in the manufacturing of cigarettes and smoking products and it boasts of a strong presence in both domestic as well as international markets. 

The company is segmented into two different products: tobacco and lifestyle and has some recognised brands under its banner such as GOLDMAN, Prestige, General, FX, Elpatron, Aadie, Valentino, Patroncito, Marley, DOS II, DOS, Jaipur, Royal King, MayPole and Golden.

NTC Industries offers a diverse range of products. From the familiar Agardeep incense sticks and Regent matchboxes to innovative tobacco blends like One8 dual flavor, they cater to various consumer preferences. The company's reach extends beyond India, with exports to European markets like the Netherlands, Belgium, and Luxembourg, showcasing their global presence.

 

 

6) Golden Tobacco Limited

After coming into existence in 1930, Tobacco Limited was taken over by the Dalmia Group in 1979 and since then it has primarily engaged in the manufacturing of tobacco products and real estate. The company product portfolio consists of:
●    Cigarettes
●    Slim cigarettes
●    Cigars 
●    Cigarillos
The company has a robust tobacco supply chain. It operates its own procurement division in Guntur, capable of handling a massive 10 million kilograms of raw tobacco per season. The processed tobacco magic happens at their Vadodara facility, which can handle a substantial 50 tons of tobacco per day for blending and processing. This end-to-end control over the tobacco supply chain ensures consistent product quality and efficiency.