💰 Financial Performance

Revenue Growth by Segment

Gross Sales Value for H1 FY26 grew 23.3% YoY to INR 8,068 Cr, driven by healthy growth in the cigarette segment and unmanufactured tobacco exports. FY25 net revenue (excluding excise) grew 27.6% to INR 5,610 Cr from INR 4,395 Cr in FY24.

Geographic Revenue Split

Domestic Gross Sales Value reached INR 7,316 Cr (90.7% of total) in H1 FY26, while International Gross Sales Value was INR 691 Cr (8.6%). Operations are highly concentrated in Northern and Western India, which contribute over 90% of cigarette sales.

Profitability Margins

Gross Profit Margin for H1 FY26 was 15.2%, down from 16.6% in H1 FY25. Net Profit Margin for H1 FY26 was 8.2% compared to 8.3% in H1 FY25. Operating profitability moderated to 20% in FY24 due to higher tobacco prices but improved to 21.4% in FY25 following the exit from the loss-making 24Seven retail business.

EBITDA Margin

Operating EBITDA margin was 8.1% in H1 FY26, a 30 bps decrease from 8.4% in H1 FY25. Operating EBITDA grew 19.0% YoY to INR 651 Cr from INR 547 Cr.

Capital Expenditure

The company projects annual cash accruals of INR 600-650 Cr for fiscals 2025 and 2026 to be utilized for capital expenditure and working capital requirements.

Credit Rating & Borrowing

CRISIL maintains a 'Stable' outlook. Interest coverage ratio was robust at 909.72x in FY25, up from 535.68x in FY24. Gearing remains exceptionally low at 0.01x.

⚙️ Operational Drivers

Raw Materials

Unmanufactured tobacco is the primary raw material. Tobacco price increases in FY24 were a key factor in the moderation of operating margins from 23.1% to 20%.

Import Sources

Not explicitly disclosed, but the company is a major exporter of unmanufactured tobacco to international markets.

Key Suppliers

The company sources from contracted burley tobacco farmers, aiming to provide 100% of them with clean drinking water by 2030.

Capacity Expansion

Not disclosed in specific units; however, the company is focusing on manufacturing efficiency to achieve a 30% reduction in GHG emissions per unit of production by 2030.

Raw Material Costs

Cost of Goods Sold (COGS) for H1 FY26 was INR 1,548 Cr, representing 19.2% of Gross Sales Value, a 13.7% increase YoY from INR 1,362 Cr.

Manufacturing Efficiency

Efficiency is tracked via ESG metrics, targeting a 30% reduction in greenhouse gas emissions per unit of production by 2030.

Logistics & Distribution

Other expenses (Net), which include distribution, were INR 352 Cr in H1 FY26, representing 4.4% of Gross Sales Value.

📈 Strategic Growth

Expected Growth Rate

10%

Growth Strategy

Growth will be achieved by leveraging its healthy market position in the cigarette industry and expanding unmanufactured tobacco exports. The discontinuation of the 24Seven retail brand is expected to sustain operating margins above 21% by removing a significant drag on profitability.

Products & Services

Cigarettes, unmanufactured tobacco (for export), confectionery, and Ferrero products.

Brand Portfolio

Godfrey Phillips, Marlboro (via partnership with Philip Morris), and Ferrero (distribution).

New Products/Services

Not disclosed for the upcoming period; focus remains on core tobacco and confectionery segments.

Market Expansion

Focusing on maintaining its ~14% volume share in the domestic cigarette industry while managing international tobacco export shipments.

Market Share & Ranking

GPIL is the second-largest player in the Indian cigarette industry with approximately 14% volume share.

Strategic Alliances

Associate of Philip Morris Global Brands Inc (which owns 25.1% of GPIL) and partnership for Ferrero product distribution.

🌍 External Factors

Industry Trends

The industry is shifting toward higher ESG compliance to offset the social impact of tobacco. GPIL is positioning itself with 2030 targets for GHG reduction and water replenishment to remain attractive to ESG-conscious investors.

Competitive Landscape

Faces intense competition from ITC Ltd, which is the dominant market leader. GPIL maintains a distant second position with a 14% share.

Competitive Moat

Moat is built on a strong brand portfolio, a strategic partnership with Philip Morris, and a robust financial profile with INR 2,405 Cr in cash surplus. This provides a buffer against competitive pressures from the dominant player, ITC Ltd.

Macro Economic Sensitivity

Highly sensitive to fiscal policy and taxation; excise duty alone accounted for INR 670 Cr in H1 FY26.

Consumer Behavior

Demand is affected by health awareness and government restrictions on consumption and marketing practices.

Geopolitical Risks

International revenue (INR 691 Cr in H1 FY26) is subject to global trade dynamics and shipment timing.

⚖️ Regulatory & Governance

Industry Regulations

Subject to strict regulations on cigarette promotion, consumption, and packaging, as well as pollution norms for manufacturing units.

Environmental Compliance

ESG goals include 30% GHG reduction, 50% renewable energy use, and 30% water consumption replenishment by 2030.

Taxation Policy Impact

The industry faces a high tax structure including Excise Duty, NCCD, GST, and GST Compensation Cess. Excise duty for H1 FY26 was INR 670 Cr, up from INR 538 Cr YoY.

Legal Contingencies

There is an ongoing dispute among members of the K.K. Modi family. While management states it has not impacted operations, it remains a key monitorable for credit rating agencies.

⚠️ Risk Analysis

Key Uncertainties

Regulatory vulnerability (high impact), intense competition from ITC Ltd, and the potential impact of the promotor family dispute on corporate governance.

Geographic Concentration Risk

Over 90% of cigarette sales are concentrated in Northern and Western India, creating high regional dependency.

Third Party Dependencies

Dependency on contracted tobacco farmers for raw material supply and key international customers for unmanufactured tobacco exports.

Technology Obsolescence Risk

Not disclosed as a high-risk factor for the tobacco industry.

Credit & Counterparty Risk

Superior liquidity with over INR 2,405 Cr in cash and investments ensures very low counterparty risk.