Godfrey Phillips India Ltd (GPIL), an associate of the KK Modi group and Philip Morris Global Brands Inc is a prominent player in the Indian cigarette manufacturing industry. The company is on the verge of rewarding its shareholders with a generous 1:2 bonus issue, as announced in an exchange filing ahead of its 87th annual general meeting (AGM). This potential move is causing a buzz in the market, driving the stock to record highs despite overall negative market trends.
GPIL, primarily known for manufacturing cigarettes, is a part of the illustrious KK Modi group, holding a 47.48% equity stake, while Philip Morris Global Brands Inc. owns 25.1%. Apart from its core tobacco business, GPIL has diversified into segments such as confectionery and retail. The company operates retail stores under the 24SEVEN (TFS) brand in the National Capital Region, Hyderabad, and Chandigarh. However, in May 2024, GPIL announced its exit from this retail segment, signaling a shift in its strategic focus.
In a regulatory filing, GPIL revealed that its board of directors is set to meet on Friday, 20th September 2024, to consider and recommend a 1:2 bonus issue. This proposal means that shareholders will receive two free shares for each share held if approved by the board. The move marks the company’s first bonus issue announcement since 2000, highlighting a significant shareholder-friendly initiative aimed at capitalizing reserves to reward loyal investors.
Following the announcement, GPIL’s shares skyrocketed by over 12%, hitting record highs and standing out in a market otherwise painted red. The proposed bonus issue has injected fresh optimism among investors, reinforcing the stock’s reputation as a multibagger. In 2024 alone, GPIL’s stock surged a staggering 241%, cementing its position as one of the year’s top-performing stocks.
The proposed bonus issue is not just a strategic move; it’s a gesture that underscores GPIL’s confidence in its financial health and future growth prospects. By capitalizing on its reserves to issue bonus shares, the company aims to enhance shareholder value and maintain investor interest. For long-term shareholders, this is a rewarding moment that amplifies their investment returns, making GPIL a stock worth watching.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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