British American Tobacco stock tumbles despite 37% growth in profits

Despite reporting a 37% profit growth for 2021, British American Tobacco (BAT) Bangladesh faced a decline in its share price owing to a sell pressure triggered by the company's lower-than-expected dividend payouts. 

Its stock price fell 2.64% to Tk627.5 per share on Thursday at the Dhaka Stock Exchange (DSE), compared to the previous trading session.

According to the company's latest disclosure, its net profit rose to Tk1,496 crore in 2021, from Tk1,088 crore a year ago. Its 2021 earnings per share (EPS) increased to Tk27.72 from Tk20.16 a year ago.

At its last board meeting on Wednesday, the tobacco multinational recommended a 150% final cash dividend for 2021, on top of the already disbursed 125% interim cash dividend for the year.

Stock brokers said investors might be unhappy with only Tk27.5 per share in total cash dividends – the lowest since 2015 - where the face value of the shares was Tk10 each.

For 2020, the company behind the most popular cigarette brands such as Benson & Hedges and John Player Gold Leaf, disbursed cash dividends of Tk60 per share. 

However, BAT Bangladesh dividends for investors are still higher as the company issued 2 new shares against each existing share in the form of stock dividends for 2020.

BAT Bangladesh has seen substantial growth in revenues and profits over the years.

Its profits nearly doubled in the last six years.

In the last year, the company has announced Tk322 crore in investment plans for a new production facility in Savar.

According to the company, the new facility will help advance exports.

BAT Bangladesh, which opened its Dhaka factory in 1965, is the largest tobacco company in the country.

The company entered the stock market in 1977 and its paid-up capital is Tk540 crore.

As of January, sponsors and directors hold 72.91% shares of the company, while the government holds 0.64%, institutions 11.94%, foreign investors 8.1%, and general investors 6.41%.