Smoking gains? Not for long

You might recognise the red and white Marlboro pack instantly. Yet only a few know that these iconic cigarettes come from Godfrey Phillips, a company that spent nearly a decade lost in a smoky haze. That was until recently. Between FY13-22, Godfrey Phillips moved along at a snail's pace. But its sales surged by over 30 per cent annually during FY23-24, sending the stock price up over six times since April 2022. But despite this remarkable run, its shares trade at a modest P/E ratio of just 27 times. This raises a compelling question: is Godfrey Phillips an undiscovered gem, or is this merely a temporary spark before the flame dies out? Let's take a closer look. How it rose from the ashes Godfrey Phillips' phoenix moment isn't just luck. It's more a result of good timing and some regulatory fortune. As the world moved past the pandemic and office life returned, so did smoking habits. Cigarette volumes surged in double digits in FY23-24, giving the company a much-needed boost. At the same time, India's total tobacco exports rose from Rs 6,880 crore in FY22 to Rs 12,005 crore in FY24, thanks to government incentives and the competitive pricing of Indian tobacco. The timing couldn't have been better. Godfrey Phillips sensed an opportunity and dramatically ramped up its exports of raw, unprocessed tobacco. This segment—which