Godfrey Phillips India shares extended their rally on Tuesday, climbing as much as 7.33% to an intraday high of Rs 2,409.80, as investors continued to pile into cigarette stocks following ITC's June-quarter earnings.
The stock has gained 18.78% over the last five trading sessions.
At 9:50 am, the stock was trading 4.42% higher at Rs 2,344.35, outperforming the broader market. The BSE Sensex was up 0.28% at 78,856.
The rally was accompanied by a sharp increase in trading volumes. Around 11.60 lakh shares, worth Rs 273.47 crore, changed hands on the NSE, while 0.80 lakh shares, valued at Rs 18.88 crore, were traded on the BSE.
The stock also remains in focus amid developments within the Modi family. According to an interview published by The Economic Times, Samir Modi said he has withdrawn all legal cases against his mother, Bina Modi, as the family attempts to resolve a long-running dispute over the late K.K. Modi's business legacy. Godfrey Phillips is the flagship listed company of the Modi Group.
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Ravi Singh, Chief Research Officer at Master Capital Services, said the stock is showing signs of recovery after an extended correction, supported by improving volumes that suggest buying interest is returning at lower levels.
He noted that while higher tobacco taxes weighed on the company's recent quarterly earnings, cigarette demand remained resilient despite price hikes, indicating the core business remains stable. Singh said investors could consider accumulating the stock on declines while monitoring support around Rs 2,100.
ITC's Cigarette Business Lifts Sentiment
Investor sentiment towards cigarette makers improved after ITC reported an 81% year-on-year increase in cigarette business revenue to Rs 15,383 crore for the June quarter. The stock also received a boost after Jefferies upgraded it to 'Buy' from 'Hold', citing resilient cigarette volumes.
The brokerage said the strength in cigarette demand could give the company greater flexibility to implement additional price hikes. It also raised its target price on ITC to Rs 350.
Despite the robust performance of the cigarette business, ITC's overall June-quarter results remained under pressure. Consolidated net profit fell 27.1% year-on-year to Rs 3,579 crore, while revenue declined 14.4% to Rs 16,908 crore. EBITDA dropped 27.9% to Rs 4,514 crore, with the EBITDA margin narrowing to 26.7% from 31.7% a year earlier.
Outside the cigarette segment, ITC's total FMCG business revenue rose 53% year-on-year to Rs 21,866 crore, while agri-business revenue declined 17% to Rs 8,082 crore.
Godfrey Phillips Q1 Show
Godfrey Phillips reported a weak June-quarter performance, with consolidated net profit falling 44.3% year-on-year to Rs 198 crore, while revenue declined 19% to Rs 1,206 crore. EBITDA dropped 46.2% to Rs 182 crore, and the EBITDA margin contracted to 15.1% from 22.7% a year earlier.
Brokerages Remain Divided
Jefferies remained the most optimistic after the earnings, saying the miss was primarily due to calibrated price hikes and portfolio interventions rather than weak demand.
Other brokerages, however, adopted a more cautious stance.
Goldman Sachs maintained a 'Neutral' rating and lowered its target price to Rs 290, citing a sharper-than-expected decline in cigarette EBIT.
JPMorgan retained its 'Neutral' rating with a target price of Rs 310, while Macquarie kept its 'Neutral' stance and a Rs 300 target price, saying tax hikes are still being passed on to consumers.
HSBC reiterated its 'Hold' rating, raising its target price to Rs 320, but warned that cigarette profitability remains under pressure amid weaker realisations, volume correction and uncertainty over future tax increases.
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