2:1 Bonus Issue, First Ever; Top Tobacco Stock Hits New 52-Week High, Rises 294% YTD; BUY?

Godfrey Phillips is a leading cigarettes and tobacco products maker in the country. This midcap stock received massive buying sentiment on September 16, skyrocketing by a whopping 16% in a single day and hitting a new 52-week high. Ahead of the bonus rewards, the consensus recommendation on Godfrey Phillips is BUY. The company will offer 2 new shares for free on 1 existing share.

Godfrey Phillips Share Price:

The tobacco stock ended at Rs 8221.05 apiece, up by Rs 897.30 or 12.25% on BSE after market hours of Monday. During the session of September 16, the stock rallied to hit a new 52-week high of Rs 8,480 apiece, with an overall upside in the day to be nearly 16%. The company's market cap is around Rs 42,744.46 crore.

Data from BSE showed that the price-to-equity ratio is at 52.73x, while the price-to-book ratio comes to around 11.13x as of September 16. The return on equity is strong at 21.10%.

YTD, the stock has emerged as a strong performer of 2024, outperforming Sensex and Nifty as well. From January 1 to September 16 of the current year, Godfrey Phillips stock has zoomed by a whopping 294% on BSE.

Godfrey Phillips Bonus Issue:

The company is scheduled to be held on Friday, 20th September 2024 to consider and recommend to the shareholders for their approval, the issue of bonus shares in the ratio of 2:1.

The 2:1 bonus issue ratio means that Godfrey Phillips will allot 2 new fully paid-up Equity Shares of Rs. 2/- each for every 1 (One) existing fully paid-up Equity Share of Rs. 2/- each, to the Equity Shareholders of the Company by capitalization of reserves.

This will be the first-ever bonus issue by Godfrey Phillips. The company carried a stock split of 1:5 ratio in November 2014, where the face value of Rs 10 each was split to Rs 2 each. While Godfrey Phillips has delivered 25 dividends since April 2000.

Godfrey Phillips BUY Recommendation:

As per Trendlyne data, the consensus recommendation from 1 analyst for Godfrey Phillips India Ltd. is BUY. Notably, the average 1-year target price is of Rs 4689 apiece, hinting at a 43% potential downside.

It needs to be noted that bonus issue allotment usually leads to a correction in a stock price. Godfrey Phillips stock will be corrected eventually and would be cheaper for both new and existing customers.

Godfrey Phillips About Us:

Godfrey Phillips India Limited, a flagship company of Modi Enterprises - KK Modi Group, is one of the largest FMCG companies in India. Our commitment to quality is unwavering and defines who we are. The company takes pride in its iconic cigarette brands, including Four Square, Red & White, Cavanders, Stellar, Focus, Originals International and others. Also, the company manufactures and distributes the global cigarette brand, Marlboro, in India under an arrangement with Philip Morris. Along with a strong cigarette and tobacco portfolio, the company also has a strong confectionery portfolio with Funda and has unique offerings for international markets.