Shares of ITC
On May 18, 2022, the board had recommended final dividend of Rs 6.25 per share of Rs 1 each. The dividend will be paid between July 22, 2022 and July 26, 2022 to those members entitled thereto. The company has fixed Saturday, May 28, 2022 as the record date for the purpose of determining entitlement of the members for payment of final dividend.
In the past three months, ITC outperformed the market by surging 25 per cent (adjusted to dividend), as compared to 3 per cent decline in the S&P BSE Sensex. Besides that, the stock has gained 19 per cent in six months, as against 5 per cent fall in the benchmark index.
The surge comes after the company reported strong results for the last two quarters. For January-March quarter (Q4FY22), ITC posted resilient performance with around 9 per cent cigarette volume growth and margin expansion across cigarettes, paperboard and FMCG business.
For Q4FY22, ITC reported 11.7 per cent year-on-year (YoY) increase in consolidated profit after tax (PAT) at Rs 4,196 crore, led by growth across segments from Rs 3,755 crore in Q4FY21. Meanwhile, the company’s consolidated revenue from operations was up 15.3 per cent to Rs 17,754 crore from Rs 15,404 crore, a year ago.
The cigarettes business staged a broad-based recovery, with volumes surpassing pre-pandemic levels. The non-cigarette fast-moving consumer goods (FMCG) business performed well too, through focused cost management interventions across value chain, premiumisation, and judicious price actions.
That apart, analysts at Prabhudas Liladher remain optimistic of ITC’s near-term outlook. “Near term outlook remains positive given cigarette volume traction amid stable tax regime, strong pricing, benefits of backward integration in paper board, benefits of supply chain disruption in leaf tobacco and strong wheat exports. Besides that, the gradual improvement in ARR and occupancy levels in hotels and sustained growth in seen in core segments like FMCG with steady margin,” the brokerage firm said.
Although analysts expect near term margin pressure in FMCG, the strong traction in other businesses will enable ITC to sustain double digit profit growth. “We increase valuation of cigarettes by 16x on improving growth and stable taxation (15x earlier) despite LT risks and assign higher multiples for FMCG and paper business,” the brokerage firm added with a ‘buy’ rating on the stock and increased target price to Rs 305 from Rs 285 per share.