2:1 Bonus Issue, First Ever: Tobacco Stock In Focus After Big Update On Bonus; Turns Rs 50K To Rs 1,83,900 YTD

Midcap stock, Godfrey Phillips Limited engaged in the business of cigarettes and tobacco products, will be in focus this week after the board meeting last week, where the company announced for clarity from RBI related to the disbursement of bonus shares to NRIs or foreign investors. Godfrey is a 2024 multi-bagger, with YTD gains of a whopping 268%. An investment of Rs 50,000 becomes nearly Rs Rs 1.85 lakh YTD.

Godfrey Phillips Share Price:

Last week, on Friday, the midcap stood closed at Rs 7609.15 apiece, with a market cap of Rs 39,562.95 crore. The stock's The stock's 52-week high and low are at Rs 8,480 apiece and Rs 1,994.90 apiece respectively. While the stock's price-to-equity ratio is at 48.81x, while its return on equity is at 21.10%.

Godfrey has been in green overall in 2024 so far. Its monthly performance sees a double-digit upside of 35.50%. On BSE, the stock has rallied by a whopping 267.80%. The stock was merely at Rs 2,087.55 during the start of January 2024.

If an investor had invested Rs 50,000 for Godfrey shares at the start of January, they will have a corpus of Rs 1,83,900 as of September 20, 2024, registering 267.8% growth in the portfolio.

Godfrey Phillips Bonus Issue:

Godfrey plans a bonus issue of a 2:1 ratio, where it will allow 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 bonus issue will be the first time by Godfrey.

However, on September 20, after a board meeting, Godfrey said, "After detailed discussions, it was decided that the Company needs to seek appropriate clarification/approval from the Regulator i.e. Reserve Bank of India (RBI) in respect of the issue of Bonus Shares to the Non-Resident shareholders (including those covered under the Foreign Direct Investment (FDI) and Foreign Portfolio Investment), having regard to the fact that the Company is engaged in manufacture of cigarette and other tobacco products wherein FDI is currently prohibited. "

Further, Godfrey added, "The Board decided that on receipt of the necessary clarification/approval from RBI, Board meeting will be subsequently convened to approve the issuance of Bonus Shares and undertake necessary steps to implement the decision thereafter."

Notably, in FY24, the company delivered its highest-ever dividend of Rs 56 per share, followed by Rs 44 per share in FY23.

BUY/SELL Godfrey shares?

As per Trendlyne data, Godfrey Phillips India Ltd. has a share price target of Rs 4689, a revenue growth forecast of -24.0%, and a profit growth estimate of 5.7% for FY25, based on top 1 analyst calls.

Is Godfrey Phillips Share Overvalued?

According to Alpha Spread data, The intrinsic value of one GODFRYPHLP stock under the Base Case scenario is 2 306.93 INR. Compared to the current market price of 7 598.15 INR, Godfrey Phillips India Ltd is Overvalued by 70%.

Godfrey Phillips India Limited, a flagship company of Modi Enterprises - KK Modi Group, is one of the largest FMCG companies in India. Some of the company's iconic cigarette brands are Four Square, Red & White, Cavanders, Stellar, Focus, Originals International and others. Also, the company has manufactured and distributed 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.