Tobacco manufacturer Godfrey Phillips India has reported a consolidated net profit of 2.12 billion rupees (~$26 million) for the quarter ended December 31, 2023. This represents a 7% increase compared to the same period the previous year. The company’s total revenue from operations rose by 34% to 14.88 billion rupees. The growth was primarily driven by the company’s core cigarettes segment, which registered a remarkable 37% increase in revenue.
Godfrey Phillips India faces competition from larger rival ITC in the tobacco industry. However, it has outperformed ITC in terms of revenue growth in the two quarters of FY24. While Godfrey Phillips India’s cigarette segment revenue grew by 17% and 29% in the respective quarters, ITC posted growth rates of 9% and 12%. This indicates that Godfrey Phillips India has been successful in capturing market share and increasing demand for its products.
Godfrey Phillips India manufactures and distributes Marlboro-branded cigarettes under a licence agreement with Philip Morris International. The company’s growth in the cigarette segment was driven by the popularity of Marlboro Compact, a product priced at 10 rupees per piece. Analysts believe that the company’s core markets, including Maharashtra, Gujarat, and Rajasthan, have experienced significant growth in demand.
Despite the positive performance in the cigarette segment, Godfrey Phillips India’s smaller retail segment, which operates the convenience store 24Seven, reported a loss of 158.6 million rupees. However, the company aims to turn around this segment and improve its contribution to overall revenue.
RTM Watch’s Take
Godfrey Phillips India’s Q3 profit growth reflects the company’s ability to capitalise on the demand for its Marlboro-branded cigarettes and expand its market share. The strong performance in the core cigarettes segment, driven by the success of Marlboro Compact, indicates that the company has effectively catered to consumer preferences. However, the loss in the smaller retail segment highlights the need for strategic improvements in this area. Going forward, Godfrey Phillips India should continue to focus on innovation, market expansion, and cost management to sustain its growth trajectory.
