Godfrey Phillips profit falls 38% as taxes bite

Research Analyst: UJVIN NEVATIA (PROPRIETOR: NEVAT INVESTMENTS) | SEBI Registration No.: INH100009628 Godfrey Phillips India Limited ( GODFRYPHLP ) reported consolidated net profit of ₹190 crore in Q2 FY27, down 37.7% year-on-year. Revenue from operations nearly doubled to ₹4,198 crore. What happened? The decline in profitability was primarily attributed to the steep cigarette tax increase implemented in Q4 FY26. Total expenses also nearly doubled to ₹4,027 crore. Domestic cigarette volumes showed a modest sequential recovery to 1,902 million sticks per month from 1,866 million in Q1 FY27. However, volumes remained below the 1,985 million recorded in Q2 FY26. The company also declared an interim dividend of ₹10 per equity share. Why does it matter? The sharp difference between revenue and profit growth highlights the impact of higher taxation on the cigarette business. Changes in indirect-tax accounting also affect revenue comparisons, so reported growth should not be confused with underlying sales growth. My view The quarter highlights the challenge of protecting profitability in a heavily taxed business. Pricing actions may help offset higher taxes, but the balance between pricing, demand and margins remains difficult. What I am watching next I would track cigarette volumes, pricing actions, tax-related costs, operating margins and the company's ability to protect profitability. No Recommendations Source: The Economic Times Disclosure: I, my entity, associates or relatives do not have any holding, position or other material interest in Godfrey Phillips India Limited.