🔍 At a Glance
Godfrey Phillips India Ltd – India’s nicotine-drenched multibagger – has seen its stock go from ₹1,500 in 2020 to ₹8,000+ in 2025. A 5X journey fueled by Marlboro mojo, operating margin expansion, and a revenue bonfire. But now with working capital stress and valuations sky-high, should investors still puff along or snuff it out?
📦 1. Company ki Aukaat: What Do They Even Sell?
- Flagship of the KK Modi Group
- Brands: Four Square, Red & White, Cavanders, and the Indian licensee for Marlboro (via Philip Morris Intl.)
- Segment breakdown:
- 🚬 Cigarettes
- 🍬 FMCG (Tea, Confectionery, etc.)
- 💼 Contract manufacturing for Philip Morris
- 14% share in India’s cigarette biz, despite ITC’s monopoly
- Also has diversified investments – think real estate and financial holdings tucked into balance sheet
📊 2. Financials That Would Make a Smoker Quit (In Awe)
💸 Revenue Growth – Slow Puff to Full Drag
| Year | Revenue (₹ Cr) | YoY Growth |
|---|---|---|
| FY21 | 2,525 | -12% |
| FY22 | 2,688 | +6% |
| FY23 | 3,562 | +33% |
| FY24 | 4,420 | +24% |
| FY25 | 5,611 | +27% |
- 5-Year CAGR = 19%
- That’s more explosive than some small-cap IT IPOs.
💰 Profits – Lighting Up Like a Bonfire
| Year | PAT (₹ Cr) | EPS (₹) | YoY Growth |
|---|---|---|---|
| FY21 | 376 | 72.4 | +300% |
| FY22 | 438 | 84.3 | +16% |
| FY23 | 690 | 132.8 | +57% |
| FY24 | 884 | 169.8 | +28% |
| FY25 | 1,072 | 206.2 | +21% |
- 5-Year Profit CAGR = 29%
- OPM held steady at ~20–24%, no serious stress
🏦 Balance Sheet – Debt-Free with Some Surprising Moves
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Debt | ₹396 Cr | ₹337 Cr | ₹355 Cr | ₹345 Cr | ₹179 Cr |
| Reserves | ₹2,572 Cr | ₹2,917 Cr | ₹3,538 Cr | ₹4,222 Cr | ₹5,235 Cr |
- Almost debt-free now 🔥
- Has over ₹3,000 Cr in investments (many under ‘Other Assets’) – underappreciated by most
🧂 3. What’s Cooking? Operational Highlights
🧾 Operating Margins
| Year | OPM % |
|---|---|
| FY21 | 21% |
| FY22 | 24% |
| FY23 | 23% |
| FY24 | 20% |
| FY25 | 21% |
- Post-COVID rebound was intense
- Operating leverage + higher realizations pushed margins above long-term average of 15–18%
💡 Other Income is a Monster
- ₹375 Cr (FY24) and ₹349 Cr (FY25)
- Company generates massive passive income via investments – boosts EPS like crazy
🤷♂️ 4. What’s Not Lit?
🚨 Red Flags (Or at Least Yellow Ones)
- Working Capital Days jumped from 28 to 104 (FY25) – suggests tighter cash flows
- Inventory cycle is 224 days – extremely high (it was 130-ish earlier)
- Stock trading at 8X book – even FMCG kings don’t touch this
- Dividend Yield = 0.7% – a bit stingy despite juicy earnings
- Valuation multiple (P/E 36x) is pricing in perfection
🧾 5. Promoter Moves & Shareholding
| Entity | Mar ’22 | Mar ’23 | Mar ’24 | Mar ’25 |
|---|---|---|---|---|
| Promoters | 72.6% | 72.6% | 72.6% | 72.6% |
| FIIs | 10.2% | 10.7% | 10.8% | 9.7% |
| DIIs | 1.6% | 1.5% | 1.9% | 3.3% |
| Public | 15.2% | 14.7% | 14.2% | 14.3% |
- No pledging. No panic. No dilution.
- Increase in DII stake is mildly bullish 📈
🔍 6. Peer Comparison (Puff-Puff Pass Edition)
| Company | P/E | ROCE | Profit Growth (3Y) | Div Yield |
|---|---|---|---|---|
| Godfrey P. | 36.3x | 29.6% | 45% CAGR | 0.70% |
| VST Industries | 22.4x | 20.9% | -39% (YoY dip) | 3.57% |
| NTC Industries | 24.5x | 9.3% | High but lumpy | 0.00% |
| ITC Ltd | 25x | 34.5% | ~15% CAGR | 3.0% |
- GPI is more expensive than ITC on every metric (except maybe taste)
- But it’s also growing faster and giving less in dividends
🔮 7. Fair Value Range – Is This Over-Smoked?
🎯 EduInvesting Valuation
- Assume normalized EPS = ₹200
- Assign realistic P/E band = 22–30x (vs current 36x)
| Multiple | FV Estimate |
|---|---|
| 22x | ₹4,400 |
| 25x | ₹5,000 |
| 30x | ₹6,000 |
🎯 Fair Value Range: ₹4,400–₹6,000
🧠 CMP: ₹8,050
Verdict? You’re definitely smoking a premium if you’re buying at this price.
🧠 TL;DR – Puff or Pass?
✅ Profit CAGR = 29%
✅ Debt-free + investment income = monster EPS
✅ Marlboro license + pricing power = moat
❌ High valuation (P/E 36x)
❌ Working capital stress
❌ Low dividend yield
EduVerdict™:
Great company. Strong business. But valuation is a nicotine overdose. Wait for the smoke to clear before lighting up a fresh position.
✍️ Written by Prashant | 📅 June 20, 2025
Tags: Godfrey Phillips India, Cigarette Stocks, Marlboro India, KK Modi Group, FMCG India, Stock Analysis, EduInvesting
