British American Tobacco PLC

British American Tobacco PLC (LON: BATS) is the FTSE 100 listed global holding Company that deals in tobacco and nicotine products.

BATS will pay a quarterly interim dividend of 54.45 pence per share attributable for Q2 FY22 on 17 August 2022 with an ex-dividend date of 07 July 2022.

Investment Rationale – WATCH at GBX 3,516.50

• Revised Guidance: The Company had reduced its guidance because of the continuing uncertainty related to Ukraine & Russia and anticipated full-year constant currency Group revenue growth of 2% to 4% and mid-single figure constant currency adjusted^*diluted EPS growth during FY22. Earlier, it had anticipated a constant currency revenue growth of 3%-5%.
• Mixed FY21 Financial Performance: The Company had posted a marginal year-on-year decline of around 0.4% in top-line revenue during FY21. Moreover, the cash conversion had shown a decline of 320 basis points during FY21.
• Weak Industry Trends: With reference to the FY21 results announced on 11 February 2022, the global tobacco industry volume is expected to witness a decline of around 2.5% during FY22. Moreover, the Government’s support for going smoke-free by 2030 in England could impact the top-line business of BATS.
• Technical Indicator: From a technical standpoint, BATS is trading between the upper Bollinger band and the middle Bollinger band, reflecting an overbought zone. The Company’s stock is trading very close to the 52-week high. Thus, it may face some retracement from the overstretched level.

One Year Share Price Chart

 (Source: Refinitiv, chart created by Kalkine Group)

Conclusion

Please note markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Based on the mixed FY21 results, and reduction in revenue guidance, we have given a “WATCH” recommendation on British American Tobacco PLC at the current market price of GBX 3,516.50 (as on 31 May 2022 at 11:58 AM GMT+1).

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings.

Note 3: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’ 

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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