Two Prints, One Lesson
Godfrey Phillips and Thangamayil Jewellery reported this week. The numbers are different. The story is identical.
Results season throws a lot of numbers at you. Most of them are noise.
Every now and then, two unrelated companies report in the same week and tell exactly the same story. That is worth paying attention to.
Godfrey Phillips, FY26: Gross sales up 27% to Rs. 18,379 crores. Net profit up 32% to Rs. 1,525 crores. Domestic cigarette volume growth: 20%.
Thangamayil, Q4 FY26: Retail sales up 107% YoY. EBITDA margin at 7.84% versus 4.33% a year ago. EPS at Rs. 45.89 versus Rs. 10.18 a year ago. Same Store Sales growth at 38.18% versus 18.10% the prior year.
Two different industries. Two different scales. Same underlying dynamic.
Volume growth and margin expansion. Simultaneously.
That combination is rarer than it looks. And it is the clearest signal that something structural is happening inside a business.
The rest of this note unpacks what is driving both, and what this pattern actually means.
Godfrey Phillips: what the numbers are saying
Revenue and profit growing faster than volume is the key observation here. Volume was up 20%. Revenue was up 27%. Profit was up 32%. Each layer expanding faster than the one below it. That is operating leverage working exactly as it should.
Unmanufactured tobacco exports contributed Rs. 1,945 crores, about 21% of net sales. This is an underappreciated segment. It adds a revenue stream that is largely independent of domestic cigarette demand, and it gives the business a buffer that pure domestic tobacco players do not have.
The honest complexity: management acknowledged that steep Q4 FY26 taxation will make the coming year harder. Their response is phased price increases rather than a single large reset. That is a considered approach. It prioritises consumer retention over short-term margin defence. Whether it works depends on competitive response and volume elasticity. That is the variable to track in FY27.
Thangamayil: understanding what four quarters actually means
One strong quarter is an event. Two is a trend forming. Four consecutive quarters of high growth is a business that has changed gear.
The Q4 numbers are striking in isolation. Retail sales doubling YoY. EBITDA margin expanding by 350 basis points. EPS jumping from Rs. 10.18 to Rs. 45.89. But the number that deserves the most attention is Same Store Sales growth: 38.18% versus 18.10% the prior year.
Same Store Sales strips away the noise of new store openings. It tells you whether the existing estate is working harder. At 38%, it is. Significantly harder.
Thanga added six new outlets during the year (66 versus 60). New stores dilute same-store metrics in the short term because they take time to ramp. Despite that dilution, SSS accelerated from 18% to 38%. That means the underlying demand environment is strong enough to overcome new store drag. That is a business firing on multiple cylinders at once.
Gross retail margin moved from 9.57% to 11.39%. EBITDA margin nearly doubled. This expansion did not come from cutting costs. It came from throughput. More sales per square foot, per outlet, per employee. The cost base stayed relatively fixed while revenues scaled. That is the definition of operating leverage in a retail business.
Liquid funds at Rs. 597 crores versus Rs. 424 crores a year ago. Growth funded from operations, not from dilution or leverage. The balance sheet is clean.
The structural backdrop
Three things are running in Thanga’s favour that are not company-specific.
Gold demand in India is structurally strong and has a long runway. The organised jewellery segment continues to take share from unorganised players, a shift accelerated by GST compliance, hallmarking regulations, and consumer preference for transparency. And at the scale Thanga is now operating, fixed costs are increasingly spread across a larger revenue base.
None of these tailwinds are short-term. All three have years left to play out.
The pattern and what it teaches
The reason both Godfrey and Thanga are worth studying together is that they illustrate the same principle in very different contexts.
Volume growth tells you demand is real. Margin expansion tells you the business has pricing power or operating leverage or both. When you see both together, and sustain them across multiple quarters, you are looking at a business that is compounding its earnings base, not just reporting a good year.
Most businesses get one. Very few get both. Fewer still sustain both.
That is the pattern. Understanding why a specific business can deliver it, and for how long, is the work.
Before you go
We have been hosting webinars as a part of the Beta to Alpha cohort and 2 weeks ago we completed our 9th webinar since we started doing this actively in August of last year.
Thangamayil and Godfrey has been featured in Growth Titans of Q1, Q2, Q3 and even Q4.
Last week we hosted Growth Titans of Q4 to cover a range of companies from 10 different sectors. We do a comprehensive sales growth and earnings growth scan and also dive deep on 6 companies.
All of this is done within a time frame of 120 minutes to deliver maximum value per unit of time.
You can access all Growth Titans webinar at a special bundled price - right from Q1 to Q4.
Disclaimer: Neither Saket Mehrotra nor Beta to Alpha is a SEBI registered investment advisor. Views are my own and do not represent my previous or current employer. Any mention of stocks and securities is not a recommendation to buy / sell. The author may hold positions in the stocks mentioned and sell it without prior notice. Please do your own due diligence before investing. The purpose of this newsletter is for educational purposes only.