GODFRYPHLP - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.1

📊 Core Financials

• Revenue & Profit Growth: Quarterly PAT declined from 365 Cr. to 304 Cr. (↓ 16.7%), showing short-term pressure.
• Margins: ROCE at 29.4% and ROE at 22.2% reflect strong profitability and efficient capital use.
• Debt Ratios: Debt-to-equity at 0.04 indicates very low leverage, strong financial stability.
• Cash Flows: Healthy operating cash generation implied by consistent profitability and low debt.

💹 Valuation Indicators

• P/E Ratio: 35.0, higher than industry PE of 26.5, suggests premium valuation.
• P/B Ratio: Current Price / Book Value ≈ 9.2, significantly above book value.
• PEG Ratio: 0.99, near fair value, indicates growth-adjusted valuation is reasonable.
• Intrinsic Value: Based on EPS (₹79.6) and industry PE, fair value ≈ ₹2,110–2,200, implying overvaluation at current price.

🏢 Business Model & Competitive Advantage

• Strong presence in tobacco and FMCG sector with established brand recognition.
• High margins and strong ROCE/ROE provide competitive advantage.
• Resilient demand base, though regulatory risks remain inherent in tobacco industry.

📈 Entry Zone & Holding Guidance

• Entry Zone: Attractive below ₹2,300–2,400, closer to intrinsic value and DMA200 support (₹2,841).
• Long-Term Holding: Suitable for investors seeking stable cash flows and high return ratios, but valuation risk exists.

✅ Positive

• High ROCE (29.4%) and ROE (22.2%) indicate strong profitability.
• Low debt-to-equity ratio (0.04) ensures financial stability.
• Dividend yield at 1.15% provides steady income.

⚠️ Limitation

• Quarterly PAT declined (↓ 16.7%).
• Stock trades at a premium valuation (P/E 35 vs industry 26.5).
• High P/B ratio (≈ 9.2) suggests overvaluation.

📉 Company Negative News

• Decline in quarterly profits may signal short-term demand or margin pressure.
• FII holdings reduced by -1.38%, showing reduced foreign investor confidence.

📢 Company Positive News

• DII holdings increased (+0.27%), showing domestic institutional support.
• Strong long-term fundamentals with consistent dividend payouts.

🏭 Industry

• Industry PE at 26.5, lower than company’s P/E, indicating sector trades at discount.
• Tobacco/FMCG sector remains resilient but faces regulatory scrutiny.
• Stable demand base supports long-term sustainability.

🔎 Conclusion

• Godfrey Phillips shows strong fundamentals with high profitability and low debt.
• However, current valuation is stretched compared to intrinsic value and industry peers.
• Entry recommended below ₹2,300–2,400 for margin of safety; long-term hold viable for stable returns.