BAT stock tumbles despite 37% growth in profits

Despite reporting a 37% increase in profit for 2021, British American Tobacco (BAT) Bangladesh saw its share price fall due to selling pressure caused by its lower-than-expected dividend payouts. Compared to the previous trading session, its stock price fell 2.64 percent to Tk627.5 per share on Thursday at the Dhaka Stock Exchange.

The company’s net profit increased to Tk1,496 crore in 2021, up from Tk1,088 crore the previous year. Its earnings per share (EPS) for 2021 increased to Tk27.72 from Tk20.16 last year. The tobacco multinational recommended a 150 percent final cash dividend for 2021 at its most recent board meeting on Wednesday, in addition to the 125 percent interim cash dividend already paid for the year.

Investors may be dissatisfied with total cash dividends of Tk27.5 per share where the face value of the shares was Tk10. It is worth noting that this level is the lowest since 2015.

The company behind popular cigarette brands such as Benson & Hedges and John Player Gold Leaf paid cash dividends of Tk60 per share in 2020.

However, BAT Bangladesh dividends are still higher for investors. This is due to the company issuing two new shares for every existing stake in stock dividends for 2020.

Over the years, BAT Bangladesh’s revenues and profits have increased significantly. In the last six years, its profits have nearly doubled. The company announced Tk322 crore in investment plans for a new production facility in Savar.

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

The company went public in 1977 and had a paid-up capital of Tk540 crore.

Sponsors and directors own 72.91 percent of the company’s stock as of January; meanwhile, the government owns 0.64 percent; institutions own 11.94 percent; foreign investors own 8.1 percent.