Tobacco Stocks in India to Invest In

Tobacco stocks in India come with consistent returns and can withstand a highly volatile market. These are the shares of business enterprises engaged in products like cigarettes, beedis, and smokeless tobacco. Despite the growing health consciousness in India, some tobacco stocks have doubled or tripled the investors’ capital. It is good to invest in such stocks, but one should perform real-time research on market sentiments to avoid the risk of investing. This piece of research includes an overview of the tobacco industry and companies operating in this promising sector. It also includes the steps to invest in tobacco sector stocks. Keep scrolling through the blog to get a seamless investment journey. 

Tobacco Sector in India: An Overview

After China, India is the 2nd largest tobacco producer in the world. The nation is the largest exporter of cigarettes. The tobacco industry in India is regulated by the COTPA (Cigarettes and Tobacco Products Act), 2003. This act imposed several provisions like prohibition of advertising tobacco products, sale of tobacco to minors, health warnings on product packaging, and prohibition of smoking in public. 

One of the most important agricultural products in the world in terms of economic impact is tobacco. This crop can be produced on soils where other crops cannot be grown successfully because it is hardy, drought-tolerant, and short-lived. An area of 0.45 million hectares (0.27% of the net cultivated area) is used to grow tobacco in India, yielding around 750 million kg of tobacco leaf. After China and Brazil, India is the world’s second-largest producer and exporter, respectively. The tobacco sector in India employs around 4,57,00,000 people and contributes the best efforts to enhance employment generation in the country. 

Tobacco Stocks List

*Data is updated as of 19th December 2024.

Overview of Tobacco Stocks

1. ITC Ltd. 

Founded: 1910

Headquarters: Kolkata, West Bengal

Market Capitalisation: ₹5,84,000 crore

ITC Ltd. is an Indian multinational company engaged in 6 different business segments. These include FMCG, Hotels, Packaging, IT (Information Technology), paper products, and tobacco. The company generate most of its revenue from tobacco products. ITC has been recognised as one of the largest tobacco companies in India. Stable growth in demand for ITC’s product made it one of the best tobacco stocks in India and attracted potential investors through its impressive dividend payout policy of declaring around 2.94% yearly dividends.   

ITC, with its deep roots in tobacco, has expanded its business across different sectors like packaging, hospitality, paperboards, and more. It not only focuses on maintaining high-quality standards but also excels in international markets with its cigarette business. 

2. Godfrey Philips India Ltd. 

Founded: 1844

Headquarters: Delhi

Market Capitalisation: ₹28,890 crore

Godfrey Philips India Ltd. is recognised for offering reputed cigarette brands, including Cavanders, Tipper, North Pole, and Four Square. This retail chain trades with unmanufactured tobacco and also has its roots in the confectionery business. The diversified product portfolio of Godfrey Philips India Ltd. helped them compete aggressively in the confectionery segment. 

Godfrey is part of Modi Enterprises, a Delhi-based company engaged in education, cigarette manufacturing, personal care, and agricultural chemicals.  Apart from the aforementioned brand, it also manufactures and offers the Marlboro brand in India under a licence agreement with PMI (Philips Morris International). 

3. VST Industries Ltd. 

Founded: 1930

Headquarters: Hyderabad

Market Capitalisation: ₹5,840 crore

VST Industries Ltd. is a Hyderabad-based company that manufactures cigarettes and other tobacco products. It operates with reputed brands like Total, Charms, Special, Moments, Total Royal Twist, Editions, and Total Active Mint. It is a publicly-listed company involved in multiple CSR (Corporate Social Responsibilities), such as health, education, and societal development. VST Industries Ltd. is listed on the NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).  

Being one of the best tobacco stocks in India, VST Industries encouraged investors by giving them around 3.96% of dividends. Investors looking to earn high dividend income in the Indian stock market can consider it as a potential investment option and make their portfolio diversified in nature. 

4. Indian Wood Products Company Ltd. 

Founded: 1919 

Headquarters: Kolkata, West Bengal 

Market Capitalisation: ₹376.80 crore

Indian Wood Products Company Ltd. is engaged in the production and marketing of wood products like plywood, block boards, flush doors, and more. The company has a keen focus on eco-friendly manufacturing practices. With its plywood and block board, India Wood leads the market across all range segments. Different factors like demand for wood products and economic growth resulted in an increase in the prices of this one of the best tobacco stocks in India. 

India Wood Products Company Ltd. offered investors around 71.52% returns and also declared around 0.17% dividends in 2024. Investing in this tobacco sector stock could be a prominent way to generate higher returns in the coming years, but it is essential to conduct your own research to eliminate the associated risks of the stock market. 

5. NTC Industries Ltd. 

Founded: 1931

Headquarters: Kolkata, West Bengal

Market Capitalisation: ₹366 crore

NTC Industries Ltd. is another tobacco manufacturer engaged in cigarette and smoking mixtures. It operates in two different segments: one is tobacco products, and another one is lifestyle products. Apart from these offerings, NTC also supply products like matchboxes and incense sticks. The tobacco products brands of this company include PATRON, Marley, Royal King, MayPole, Goldmans, Prestige, General, etc. Besides an effective domestic presence, NTC also exports its products to international forums like Rotterdam, Luxembourg, and Amsterdam.

Being one of the best tobacco stocks in India, NTC Industries Ltd. offered 189.22% of returns in the past year. It attracts most investors to add this SME stock in their portfolio so as to generate balanced returns in the coming decades. 

Tobacco Stocks List With PE Ratio

*Data is updated as of 19th December 2024.

How to Invest?

To invest in the best tobacco stocks in India, consider the following steps. 

• Step 1: Research the potential tobacco stocks and choose the best among them to invest. 
• Step 2: Identify your investment goals and assess a directional path to achieve them optimally. 
• Step 3: Open a demat account with a broker and consult your financial advisor to choose reliable stocks. 
• Step 4: Place a buy order through your demat account and execute it to get shares transferred. 
• Step 5: Track your returns in the portfolio section and wait for the right time to book profit. 

To Conclude

Tobacco stocks in India come with excessive resilience. Investors can enjoy balanced returns during economic downturns. The tobacco sector in India plays a significant role in economic growth. Moreover, strong growth potential and consistent dividend income encouraged most investors to add tobacco stocks to their portfolios.  

FAQs

1. What are the best tobacco stocks in India?

Ans. Here are some best tobacco stocks in India with their market capitalisation and analyst ratings. 

*Data is updated as of 19th December 2024.

2. What are the risks for tobacco stocks?

Ans. Tobacco stocks in India are resilient to economic downturns but might have the impacts of several risks. These risks include health concerns, changes in regulations, and a rise in taxes/duties. Make a strategic investment decision after assessing these risks to generate consistent returns in the Indian stock market. Conduct your own research on tobacco sector stocks and choose the relevant options to invest in. 

3. Is it worth investing in tobacco stocks?

Ans. Tobacco stocks in India are resilient to the volatility of the market. It offers investors with higher returns and impeccable dividend income. Investing in tobacco stocks could be a worthwhile option for investors with high-risk tolerance and patience. However, it is essential to conduct your own research on the tobacco sector stocks to diversify your portfolio. 

4. Which is the largest tobacco company in India?

Ans. ITC Limited dominates the tobacco industry and has a significant share of manufacturing and distributing tobacco products in domestic and international markets. The market capitalisation of ITC Ltd. stands at INR5,84,000 crores, and its PE (Price-to-Earnings) ratio is 28.45. 

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