Shares of seemed to plunge by more than 65% on Tuesday, September 16, surprising many investors as they noticed the steep drop in their demat accounts. However, this sharp fall was not due to any market correction or external factors, but a result of the company’s 2:1 bonus issue, which came into effect today, tripling the number of shares held by investors while adjusting the stock price accordingly, without affecting the overall value of their holdings.
The cigarette maker’s shares closed at ₹10,229 on Monday, September 15. On Tuesday morning, the stock opened at ₹3,501, a 66% drop that aligns precisely with the 2:1 bonus share adjustment, with the adjusted price set at ₹3,431 per share. The bonus issue effectively tripled the number of outstanding equity shares and adjusted the price accordingly.
Following the price adjustment, demand for the stock surged on Dalal Street, pushing it up by 9% to the day’s high of ₹3,720. The company had announced the bonus issue in August in a 2:1 ratio and set today as the record date to determine shareholder eligibility.
Companies generally announce bonus issues to improve share liquidity and make the stock more affordable for retail investors, who often consider the stock expensive when it trades at higher prices.
Reports stellar performance in Q1
Godfrey Phillips, which owns cigarette brands like Four Square, Red & White, and Cavanders, in early August, reporting a robust domestic cigarette sales volume growth, reaching 1,903 million per month, marking an increase from 1,497 million per month in Q1FY25.
This reflects continued growth in quarterly sales and builds on the consistent upward trend observed throughout FY25. Against the backdrop of strong volume growth, the company reported a 36.5% YoY jump in revenue to ₹1,486 crore, while higher production costs and expenses hit the company’s margins. However, net profit grew by 55.9% YoY to ₹356 crore.
It further strengthened its partnership with Philip Morris International for the manufacture and distribution of Marlboro brand cigarettes in India. The company has been steadily gaining domestic market share while maintaining focus on its international business, which contributed 25% of net sales during the reporting quarter.
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