Equal · Financial Report

Gudang Garam

GGRM/FY2021–FY2025/Educational Analysis/IDR/Data source · 2026-06-19

ROE = tax × interest × margin × turnover × leverage

	FY2021	FY2022	FY2023	FY2024	FY2025
Tax burden	0.77x	0.76x	0.78x	0.72x	0.61x
Interest burden	0.99x	0.93x	0.92x	0.73x	0.90x
Operating margindriver	5.9%	3.1%	6.2%	1.9%	3.2%
Asset turnover	1.39x	1.41x	1.29x	1.16x	1.19x
Leverage (equity mult.)	1.52x	1.53x	1.52x	1.37x	1.20x
= Return on Equity (consolidated)	9.5%	4.8%	8.7%	1.6%	2.5%
Return on Invested Capital (ROIC)	8.7%	4.7%	8.2%	2.0%	2.8%

Consolidated (pre-minority-interest) basis; the headline ROE in the ratio grid is owners’ basis.

Liquidity

	FY2021	FY2022	FY2023	FY2024	FY2025
Current Ratio(Current Assets / Current Liabilities)	2.09x	1.90x	1.83x	2.29x	3.68x
Quick Ratio((Current Assets − Inventory) / Current Liabilities)	0.41x	0.26x	0.25x	0.34x	0.56x
Cash Ratio(Cash / Current Liabilities)	0.15x	0.15x	0.14x	0.18x	0.34x
Working Capital(Current Assets − Current Liabilities)	Rp 31 T	Rp 26 T	Rp 25 T	Rp 27 T	Rp 29 T

Leverage & Solvency

	FY2021	FY2022	FY2023	FY2024	FY2025
Debt to Equity (DER)(Total Debt / Total Equity)	0.17x	0.18x	0.22x	0.15x	0.01x
Liabilities to Equity(Total Liabilities / Total Equity)	0.52x	0.53x	0.52x	0.37x	0.20x
Debt to Assets(Total Debt / Total Assets)	0.11x	0.11x	0.14x	0.11x	0.01x
Net Debt(Total Debt − Cash)	Rp 5.9 T	Rp 5.7 T	Rp 9.1 T	Rp 5.7 T	-Rp 2.9 T
Interest Coverage(EBIT / Interest Expense)	98.04x	14.93x	12.84x	3.72x	10.14x
Equity Multiplier (Assets ÷ Equity)	1.52x	1.53x	1.52x	1.37x	1.20x

Profitability

	FY2021	FY2022	FY2023	FY2024	FY2025
Gross Margin(Gross Profit / Revenue)	11.4%	8.9%	12.3%	9.5%	10.1%
Operating Margin(EBIT / Revenue)	5.9%	3.1%	6.2%	1.9%	3.2%
Net Margin(Net Income / Revenue)	4.5%	2.2%	4.5%	1.0%	1.7%
EBITDA(EBIT + D&A)	Rp 10 T	Rp 6.9 T	Rp 11 T	Rp 5.1 T	Rp 5.9 T
EBITDA Margin(EBITDA / Revenue)	8.2%	5.5%	8.9%	5.2%	6.6%
Return on Assets (ROA)(Net Income / Total Assets)	6.2%	3.1%	5.8%	1.2%	2.1%
Return on Equity (ROE)(Net Income (Owners) / Equity (Owners))	9.5%	4.8%	8.7%	1.6%	2.5%
Tax Burden (Net ÷ Pretax)	0.77x	0.76x	0.78x	0.72x	0.61x
Interest Burden (Pretax ÷ EBIT)	0.99x	0.93x	0.92x	0.73x	0.90x
Return on Invested Capital (ROIC)	8.7%	4.7%	8.2%	2.0%	2.8%

Operations & Efficiency

Turnover	FY2021	FY2022	FY2023	FY2024	FY2025
Asset Turnover(Revenue / Total Assets)	1.39x	1.41x	1.29x	1.16x	1.19x
Inventory Turnover(COGS / Inventory)	2.32x	2.38x	2.24x	2.20x	2.40x
Receivables Turnover(Revenue / Receivables)	45.02x	57.15x	60.94x	53.59x	46.47x
Payables Turnover(COGS / Payables)	110.36x	86.78x	98.01x	79.18x	117.77x

Conversion Period	FY2021	FY2022	FY2023	FY2024	FY2025
Days Inventory Outstanding (DIO)(365 × Inventory / COGS)	157.1 days	153.4 days	163.0 days	165.7 days	151.8 days
Days Sales Outstanding (DSO)(365 × Receivables / Revenue)	8.1 days	6.4 days	6.0 days	6.8 days	7.9 days
Days Payable Outstanding (DPO)(365 × Payables / COGS)	3.3 days	4.2 days	3.7 days	4.6 days	3.1 days
Cash Conversion Cycle (CCC)(DIO + DSO − DPO)	161.9 days	155.6 days	165.3 days	167.9 days	156.5 days

Cash Flow

	FY2021	FY2022	FY2023	FY2024	FY2025
Free Cash Flow(Operating Cash Flow − Capex)	Rp 391 M	Rp 4.4 T	-Rp 1.3 T	Rp 3.3 T	Rp 9.1 T

Valuation

price as-of 2026-07-31fundamentals: FY2025

Price Rp 19,042 · market cap Rp 37 T

Multiple	GGRM	Peer median	vs median
P/E	23.49x	12.93x	+82%
P/B	0.58x	1.61x	-64%
P/S	0.41x	0.56x	-27%
EV/EBITDA	5.74x	5.74x	0%
EV/EBIT	11.95x	8.74x	+37%
EV/Sales	0.38x	0.56x	-32%
FCF Yield	24.97%	7.78%	+221%
Dividend Yield	2.63%	3.80%	-31%

Only 3 peers are covered here, so the median is itself one of the members. A 0% gap can simply mean GGRM sits at the median.

EV = mkt cap Rp 37 T + debt Rp 762 M − cash Rp 3.6 T + minority interest Rp 3.1 M = Rp 34 T

What the price implies

At today’s price, the market is paying for -12.5%/yr FCF growth (-14.7% at 12.0% to -10.5% at 16.0% discount rates). Delivered over the last 4 years: 119.9% FCF · -8.0% revenue.

Reverse DCF: single-stage FCF, terminal growth 2.5%, discount band 12.0–16.0% (β=1; build cited in Methodology). Not a forecast.

Forward DCF (glass-box)

This model projects the operating cash the whole business generates, discounts it back at the blended cost of capital, and subtracts net debt. What remains is the equity value, stated per share. Every input below comes from the company's own audited record or from cited market data, and you can adjust each one yourself.

Assumption	Value	Basis
Rf (risk-free)	7.26%	Indonesia 10Y government bond, re-verified 31 Jul 2026
ERP (Rm − Rf)	6.69%	Damodaran Indonesia, Jul 2026 (Baa2, CRP 2.46%)
β	0.68 → 0.69	Tobacco (unlevered) relevered at own D/E 0.02
Cost of equity	11.88%	Rf + β × ERP
Cost of debt	7.66%	median interest coverage 12.8x (EBIT ÷ interest, FY2021–FY2025) implies a Aaa/AAA synthetic rating and a 0.40% default spread, over a 7.26% base (Indonesia 10Y 7.26%, already the sovereign rate). Its BOOK rate is 36.5%, which is what past debt actually costs; the gap is legacy or subsidised borrowing, not the rate on new debt. Spread table: A. Damodaran, Ratings, Interest Coverage Ratios and Default Spread, January 2026 data update (large non-financial service firms)
Tax rate	24.0%	median effective rate, FY2021–FY2025 (pretax ≈ EBIT − interest)
WACC	11.76%	98% E × CoE + 2% D × Kd × (1 − t)
Revenue growth (yr 1, fading)	-8.0%	delivered 4-yr revenue CAGR -8.0%, fading linearly to terminal
EBIT margin	3.8%	mean EBIT margin, last 3 FYs
D&A / revenue	3.1%	mean D&A/revenue, last 3 FYs
Capex / revenue	3.6%	mean capex/revenue, last 3 FYs, for the explicit years. The terminal year instead FUNDS ITS OWN GROWTH: in stable growth g = reinvestment rate x return on capital, and returns are assumed to converge to the 11.8% cost of capital, so the perpetuity reinvests 21.3% of NOPAT and terminal capex is 3.0% of revenue against depreciation of 3.1%. Both simpler rules are wrong in opposite directions: holding the historical ratio charges a build phase in perpetuity, while setting capex equal to depreciation hands the company 2.5% growth forever for no new capital. Because returns converge to the cost of capital, terminal growth here is value-neutral
ΔNWC / Δrevenue	30.8%	median ΔNWC/Δrevenue across the seeded years (NWC = AR + inventory − AP)
Terminal growth	2.5%	BI inflation-target midpoint (2.5% ± 1%)

Growth path

year 1 → fading to terminal over 5 yrs-8.0%

EBIT margin3.8%

WACC11.8%

Terminal growth2.5%

Explicit years5

FCFF drivers

FCFF = NOPAT + D&A − capex − ΔNWC

Each default is the company's own historical average, which describes the phase it happened to be in. Switch a driver to Per-year when that phase is ending: a company mid-build does not spend at its peak rate forever, and one in a capex pause does not stay there. The terminal year keeps its own ratios, so a taper you enter here changes the explicit window and leaves the perpetuity coherent.

Capex

% of revenue3.6%

D&A

% of revenue3.1%

ΔNWC

% of the CHANGE in revenue30.8%

Year	+1	+2	+3	+4	+5	T∞
Growth	-8.0%	-5.4%	-2.8%	-0.1%	2.5%	2.5%
Revenue	Rp 82 T	Rp 78 T	Rp 76 T	Rp 76 T	Rp 77 T	Rp 79 T
EBIT	Rp 3.1 T	Rp 2.9 T	Rp 2.8 T	Rp 2.8 T	Rp 2.9 T	Rp 3.0 T
NOPAT	Rp 2.4 T	Rp 2.2 T	Rp 2.2 T	Rp 2.2 T	Rp 2.2 T	Rp 2.3 T
+ D&A	Rp 2.6 T	Rp 2.4 T	Rp 2.3 T	Rp 2.3 T	Rp 2.4 T	Rp 2.5 T
− Capex	Rp 3.0 T	Rp 2.8 T	Rp 2.7 T	Rp 2.7 T	Rp 2.8 T	Rp 2.4 T
− ΔNWC	-Rp 2.2 T	-Rp 1.4 T	-Rp 662 M	-Rp 31 M	Rp 582 M	Rp 597 M
FCFF	Rp 4.2 T	Rp 3.2 T	Rp 2.5 T	Rp 1.8 T	Rp 1.3 T	Rp 1.8 T
PV	Rp 3.7 T	Rp 2.6 T	Rp 1.8 T	Rp 1.2 T	Rp 720 M	Rp 11 T

Check it yourself: revenue × margin = EBIT · NOPAT = EBIT × (1 − tax) · FCFF = NOPAT + D&A − Capex − ΔNWC · PV = FCFF ÷ (1+WACC)^yr · TV = FCFF(T∞) ÷ (WACC − g), discounted from year 5 · equity = EV − net debt − minority · per share = equity ÷ shares outstanding

EV = PV(explicit) Rp 9.9 T + PV(TV) Rp 11 T = Rp 21 T · TV 53% of EV · − net debt -Rp 2.9 T − minority Rp 3.1 M = equity Rp 24 T ÷ shares outstanding

Model output: Rp 12,436/share (-35% vs price Rp 19,042)· exit-multiple check (5.7x): Rp 15,778

Under these assumptions the model lands 35% below today's price. The market, in other words, is paying for faster growth, a fatter margin, or a lower discount rate than the inputs here assume.

Sensitivity (per share, Rp)

g \ WACC	10.8%	11.8%	12.8%
2.0%	13,540	12,482	11,617
2.5%	13,539	12,436	11,543
3.0%	13,538	12,385	11,462

Model output under the stated assumptions. Every input above comes from the company's own audited record or from cited market data, and every one can be adjusted. This is not a price target and not advice.

Educational analysis. Multiples pair today’s price with the latest audited fiscal year (trailing-FY convention); peer figures are the covered peer sample, not the whole market. Never a price target.

Macro backdropfull backdrop + sensitivity map →

BI Rate 5.75%IDR/USD 18,05810Y government bond yield 7.26%Inflation 3.34%(as-of 2026-07-31)

GDP/consumption ↑(M)Rupiah weaker(L)

Income Statement

	FY2021	FY2022	FY2023	FY2024	FY2025
Revenue	Rp 125 T	Rp 125 T	Rp 119 T	Rp 99 T	Rp 89 T
Cost of Goods Sold	Rp 111 T	Rp 114 T	Rp 104 T	Rp 89 T	Rp 80 T
Gross Profit	Rp 14 T	Rp 11 T	Rp 15 T	Rp 9.4 T	Rp 9.0 T
Operating Income (EBIT)	Rp 7.3 T	Rp 3.9 T	Rp 7.4 T	Rp 1.9 T	Rp 2.8 T
Interest Expense	Rp 75 M	Rp 262 M	Rp 579 M	Rp 503 M	Rp 278 M
Net Income	Rp 5.6 T	Rp 2.8 T	Rp 5.3 T	Rp 981 M	Rp 1.6 T
Net Income Attributable to Owners	Rp 5.6 T	Rp 2.8 T	Rp 5.3 T	Rp 981 M	Rp 1.6 T
Depreciation & Amortization	Rp 2.9 T	Rp 3.0 T	Rp 3.1 T	Rp 3.2 T	Rp 3.1 T

Balance Sheet

	FY2021	FY2022	FY2023	FY2024	FY2025
Cash & Equivalents	Rp 4.2 T	Rp 4.4 T	Rp 4.3 T	Rp 3.7 T	Rp 3.6 T
Accounts Receivable	Rp 2.8 T	Rp 2.2 T	Rp 2.0 T	Rp 1.8 T	Rp 1.9 T
Inventory	Rp 48 T	Rp 48 T	Rp 47 T	Rp 41 T	Rp 33 T
Current Assets	Rp 59 T	Rp 55 T	Rp 54 T	Rp 48 T	Rp 39 T
Total Assets	Rp 90 T	Rp 89 T	Rp 92 T	Rp 85 T	Rp 75 T
Accounts Payable	Rp 1.0 T	Rp 1.3 T	Rp 1.1 T	Rp 1.1 T	Rp 683 M
Current Liabilities	Rp 28 T	Rp 29 T	Rp 30 T	Rp 21 T	Rp 11 T
Total Liabilities	Rp 31 T	Rp 31 T	Rp 32 T	Rp 23 T	Rp 13 T
Total Interest-Bearing Debt	Rp 10 T	Rp 10 T	Rp 13 T	Rp 9.4 T	Rp 762 M
Total Equity	Rp 59 T	Rp 58 T	Rp 61 T	Rp 62 T	Rp 63 T
Equity Attributable to Owners	Rp 59 T	Rp 58 T	Rp 61 T	Rp 62 T	Rp 63 T

Cash Flow Statement

	FY2021	FY2022	FY2023	FY2024	FY2025
Operating Cash Flow	Rp 5.3 T	Rp 9.9 T	Rp 4.4 T	Rp 6.5 T	Rp 12 T
Capital Expenditure	Rp 4.9 T	Rp 5.4 T	Rp 5.7 T	Rp 3.2 T	Rp 2.5 T

Company Deep Analysis

Reviewed: 2026-07-31

Analyst Verdict

Gudang Garam is the second-largest kretek (clove-cigarette) producer, and its economics tell the story of the excise squeeze. Gross margin is thin (~10%), and net margin (1–4.5%) and ROE (1.6–8.8%) are both low and volatile; ROE fell all the way to 1.6% in FY24 before a partial recovery to 2.5% in FY25. Annual tobacco-excise (cukai) hikes, plus consumers down-trading to cheaper brands, keep squeezing the mix. The balance sheet is a fortress (near-zero debt, D/E 0.01) but carries heavy inventory, and the company is diversifying into the Kediri airport and toll road, a capital-allocation move that remains contested. It is a cash-rich but structurally challenged tobacco play, and excise policy is the factor that matters most.

Business Model

Indonesia’s second-largest cigarette manufacturer, specialising in kretek (clove cigarettes), machine-rolled (SKM) and hand-rolled (SKT), with flagship brands such as Gudang Garam International and Surya. Revenue is cigarette sales; profitability is dictated by excise (cukai), tobacco/clove input costs and product mix. It has diversified into infrastructure (the Dhoho/Kediri airport and a toll road).

Segments

Machine-rolled kretek (SKM) is the volume core, with hand-rolled (SKT) and premium lines. The economics are excise-dominated: tobacco excise is the largest cost component, so margins are structurally thin (gross ~10%) and highly sensitive to the annual cukai schedule and to down-trading (consumers shifting to cheaper, lower-excise tiers).

Value Chain & Positioning

Tobacco & clove sourcing → manufacturing (SKM/SKT) → excise/banderol → distribution → retail. The margin pool is squeezed between rising excise (paid upfront via banderol) and price-sensitive consumers; pricing power is limited, so the swing is excise policy and mix, not operating leverage. Large leaf inventories tie up working capital (inventory turnover ~2.3x).

Competitive Forces (Porter’s 5)

Supplier powerMedium

How much leverage input/funding providers have over pricing.

Tobacco and clove farmers, plus the dominant “supplier”, the government via excise, drive input costs.

Implication → Excise is effectively the largest, ever-rising input cost: the core margin pressure.

Buyer powerHigh

How much leverage customers have to push prices down.

Price-sensitive smokers readily down-trade to cheaper brands and tiers.

Implication → Limits price pass-through of excise hikes: the reason margins are thin and volatile.

Threat of new entryLow

How easily new competitors can enter the market.

Excise licensing, distribution and brand scale are barriers; new mass entrants are rare.

Implication → Protects the incumbents’ volumes, but not their excise-squeezed margins.

Threat of substitutesMedium

Risk that alternative products/services replace demand.

Cheaper tier-2/3 brands, illicit cigarettes and (slowly) vaping substitute.

Implication → Down-trading and illicit trade erode mix and volumes.

Competitive rivalryHigh

Intensity of competition among existing players.

Intense competition with HMSP and others on price/tier amid shrinking legal volumes.

Implication → Compresses GGRM’s already-thin margins, especially in the value segment.

Moat / Competitive Edge

Moderate and eroding. GGRM’s moat is brand heritage (kretek), nationwide distribution and scale. But the moat does not protect margins from the dominant external force, excise policy, and consumer down-trading is weakening brand pricing power. The fortress balance sheet (near-zero debt, large inventory/cash) provides resilience, but returns are structurally pressured; the airport diversification is an attempt to redeploy capital outside the squeeze.

Key Drivers & Sensitivities

Excise (cukai) policy
The dominant driver. Annual tobacco-excise hikes compress margins; ROE fell to 1.6% (FY24); the size and timing of cukai increases is the single biggest swing factor.
Volume / down-trading
Consumers shifting to cheaper tiers erodes GGRM’s mix and volumes: a structural headwind alongside excise.
Pricing power
The ability to pass excise into prices without losing volume; limited, and the key to margin stabilisation.
Input costs (tobacco, clove)
Leaf and clove prices affect the thin gross margin; large inventories add working-capital sensitivity.
Capital allocation (diversification)
The Kediri airport/toll-road investment redeploys cash outside tobacco: a contested, long-payback bet that affects FCF.

Linkages

Tied to consumer disposable income, excise/fiscal policy and tobacco/clove agriculture. Down-trading intensifies in weak-income periods; the airport links it to the infrastructure and aviation cycles. Fiscal policy (cukai as a revenue tool) is the dominant external linkage.

Recent Developments

The fact the previous text omitted is the largest one: revenue has fallen 28% across the window, Rp124.88tn to Rp89.37tn, including 17.1% in FY2024 and 9.4% in FY2025. Most of the rest follows from it. Gross margin ran 8.9% to 12.3%, operating margin 1.9% to 6.2%, net margin 1.0% to 4.5%, and ROE fell to a 1.6% trough in FY2024 before reaching 2.5%. Against that the balance sheet improved sharply: debt to equity fell to 0.01× and the current ratio rose to 3.68×, its highest. Free cash flow swung from minus Rp1.29tn in FY2023 to Rp9.13tn in FY2025, a figure larger than any single year of net income in the window, and one to read alongside the shrinking top line rather than apart from it.

Regulation

Dominated by excise (cukai): the Directorate General of Customs & Excise (DJBC) and the Ministry of Finance set annual tobacco-excise tariffs and tier structures; the single biggest determinant of profitability. Tobacco-control rules (advertising, health warnings, smoking restrictions) and minimum-price rules apply. Listed on the IDX.

ESG & Sustainability

Tobacco carries inherent product-health (S) and governance scrutiny that limits its ESG profile and excludes it from many ESG funds. Social impacts include public-health externalities and the livelihoods of tobacco/clove farmers and SKT (hand-rolling) labour. Governance is family-controlled. The airport diversification carries its own environmental footprint.

Risks

Aggressive excise (cukai) hikes compressing margins
Down-trading to cheaper tiers / illicit cigarettes
Thin, volatile profitability (ROE 1.6% in FY24)
Capital-allocation risk from the airport/toll diversification
Tobacco-control regulation and ESG exclusion

Outlook & What to Watch

A cash-rich but structurally challenged tobacco producer. The base case is continued excise pressure and down-trading keeping returns thin and volatile; the fortress balance sheet provides resilience and the airport is a diversification option. Profitability hinges on excise policy and pricing power. (Interpretation, not a forecast.)

Key KPIs

Excise (cukai): Tobacco excise: the dominant cost and policy variable
Gross margin: Gross profit ÷ revenue: structurally thin (~10%)
Net margin: Net income ÷ revenue: low and volatile
ROE: Net income ÷ equity: pressured by excise
FCF: Free cash flow: swings with airport capex

Sources

Curated narrative (educational interpretation), backed by the linked sources. The figures above are deterministic. Not investment advice.