Godfrey Phillips shares surged 55% in the last 3 sessions. Here's my analysis.

Godfrey Phillips India shares surged 55% in the last 3 sessions, i've been tracking this stock for a long time and im just sharing my analysis. Feel free to downvote me if you disagree. Godfrey Phillips is the second largest cigarette company of India, they have an exclusive supply agreement with Phillip Morris International to manufacture and distribute Marlboro cigarettes, besides marlboro they have their own cigarette brands too such as Four square, Red & White and Cavenders. It is a part of KK Modi group who expanded its presence in india significantly. The Indian Cigarette market is a ₹1.2 lakh crore industry, it is a cash rich business due to its high margins but it is a heavily regulated sector with high taxes. Despite this, tobacco companies increase their prices without losing demand due to brand loyalty. The market leader in this segment is ITC with a 75% share, it dominates the industry with brands like Gold flake, Classic and Navy Cut. ITC is diversified into other segments like FMCG, Hotels and packaging– unlike godfrey phillips which is still more of a tobacco company but holds a lesser market share of approximately 10%, it is heavily reliant on its cigarette business. They have tried expanding into FMCG with their convenience store brand 24Seven but it is still a niche brand, another product is pan vilas which has faced limited success in the market as it is dominated by Vimal, Rajnigandha, etc. Godfrey Phillips is also going through a Family Feud, in September 2024 the board removed Samir Modi as the Executive Director and handed over this role to his sister, Charu Modi. Not going into detail about this but Samir Modi who is the Ex- Director of Godfrey phillips had some major concerns regarding the company. First is diversification, they are still dependent upon tobacco and haven't expanded into other segments like ITC. Second is their Per-Cigarette Realisation which is Rs. 0.98 while Marlboro's per cigarette realisation is at Rs. 2.02. In comparison ITC achieves ₹2.44 per cigarette. The growth of this stock is remarkable as it was trading at an average price of ₹1500 per share in 2023 and is now trading at ₹7500 per share as i write this on 18 February 2025. The profitability is growing YoY but it is still not anywhere near ITC. Godfrey Phillips ROCE has grown from 14% from 2016 to 22% in 2024. The fundamentals of this company is strong and they have expanded their presence more in the premium cigarette market with brands like Marlboro and Four square. The shareholding pattern of this company shows that the Modi family holds approximately 29.85% of Godfrey Phillips India while Phillip Morris Global Brands owns 25.10%. The Promoter holding has been stable while FIIs have slightly reduced their holdings. In conclusion, Godfrey Phillips is a solid company, no doubt about that but it has challenges ahead, whether it's family drama or heavily reliant on cigarettes and the need to diversify. Looking forward to your thoughts on this particular stock. Apologies if i missed out on anything as it's my first post.