Shares of Godfrey Phillips India experienced a significant uptick, gaining over 9% as they began trading adjusted for a 2:1 bonus issue. The tobacco major's stock performance was further bolstered by impressive first-quarter results.

Bonus Issue Implementation

Under the newly implemented bonus issue, shareholders received two bonus shares of ₹2 each for every existing share held. This marks Godfrey Phillips India's first-ever bonus issue, funded by capitalizing ₹2,079.76 lakh from general reserves and retained earnings. In conjunction with this move, the company's board approved an increase in authorized share capital from ₹25 crore to ₹50 crore.

Stock Performance

The stock hit an intraday high of ₹3,720.00, trading up 7.2% at ₹3,656.00 around 10:15 am. This positive momentum comes despite a 62.1% decline over the past month, indicating renewed investor interest following the bonus issue and strong quarterly performance.

Q1 Financial Highlights

Godfrey Phillips India reported robust financial results for the first quarter:

The company's net profit saw a substantial increase of 55.86% year-over-year, rising to ₹356.30 crore. Revenue growth was equally impressive, climbing 36.60% to reach ₹1,486.00 crore. EBITDA also showed significant improvement, growing by 55.56% to ₹467.00 crore.

However, it's worth noting that the EBITDA margin experienced a slight contraction, decreasing from 24.80% to 22.70%.

Operational Performance

The company's operational efficiency is evident in its improved operating profit, which increased by 59.22% year-over-year to ₹325.60 crore. This growth outpaced the revenue increase, indicating enhanced operational effectiveness.

Market Reaction

The market's positive response to Godfrey Phillips India's bonus issue and strong financial performance underscores investor confidence in the company's growth trajectory and shareholder-friendly policies. As the tobacco industry navigates evolving regulatory landscapes and changing consumer preferences, Godfrey Phillips India's robust financial health positions it well to address future challenges and opportunities in the sector.

Godfrey Phillips India (GPI) has announced a generous bonus share allocation, set to take effect next week. The company's board has recommended a 2:1 bonus issue, which means shareholders will receive two new shares for every one share they currently hold.

Key Details of the Bonus Issue

• Ratio: 2:1 (two new shares for every one existing share)
• Record Date: September 16
• Eligibility: Shareholders must be on the company's records as of the record date

Implications for Investors

Under India's T+1 settlement cycle, investors looking to benefit from this bonus issue must purchase GPI shares at least one trading day before the record date. This ensures they are registered as shareholders in time to qualify for the bonus allocation.

Industry Context

Godfrey Phillips India is not alone in its move to reward shareholders. Another company, GHV Infra Projects, has also announced a bonus issue with the same record date. GHV Infra's bonus issue is structured as follows:

• Ratio: 3:2 (three new shares for every two existing shares)
• Volume: Up to 4.32 crore shares
• Face Value: Rs 5.00 per share

Market Impact

Bonus issues are generally viewed positively by the market as they increase the number of outstanding shares without affecting the company's underlying value. For Godfrey Phillips India shareholders, this 2:1 bonus issue effectively triples their shareholding, potentially improving liquidity and making the stock more accessible to a broader range of investors.

Investors should note that while bonus issues increase the number of shares they own, the overall value of their holding remains the same as the stock price typically adjusts proportionately. However, such corporate actions often generate increased interest in the stock and can lead to higher trading volumes in the short term.

As the record date approaches, market participants will be closely watching Godfrey Phillips India's stock performance and any potential price movements leading up to September 16.