1550% Payout, 3.4% Yield: Cigarette Maker's 1st Dividend For FY24 Coming; Ex-Dividend, Record Date, Q3 Preview

Cigarette maker, ITC is currently the top-performing stock of the FMCG segment, outperforming giant HUL. ITC is in focus on January 29 for its Q3 results. But the stock has also stored in new interim dividends for FY24 on cards after paying a hefty 1,550% dividends in 2023. The company has a dividend yield of 3.4%, one of the highest in large-caps. ITC is in a sweet spot, poised for healthy growth across verticals right from its major business cigarette to hotels and bolstering FMCG.

ITC Share Price:

Last week, on January 25, ITC share price ended at Rs 455.45 apiece, down by 1.8% on BSE with a market cap of Rs 5,68,262.28 crore.

In a year, ITC's share price has risen by over 32% on BSE.

Ahead of Q3 results, brokerages like Prabhudas Lilladher and Kotak Institutional Equities have set target prices of Rs 487 and Rs 470 per share respectively. It will be interesting to watch if ITC surpasses these targets on Monday or after Q3 results. Also, new target prices post Q3 results will be eyed.

ITC Dividend:

The FMCG is continuing on its track record of paying hefty dividends. ITC will consider the declaration of Interim Dividend for the financial year ending on 31st March 2024. This will be the first dividend payout for FY24. Notably, the dividend amount along with record and payment dates will be known on January 29 most likely.

In 2023, the company paid dividends up to 1,550% amounting to Rs 15.5 per share which was for the financial year 2022-23.

ITC has a dividend yield of 3.4% on the current market price.

ITC Q3 Results:

For Q3FY24, in its preview note, Kotak Institutional Equities said, "We estimate 2-2.5% yoy growth in cigarette volumes (versus 4.5%/8% in 2Q/1Q) as growth moderates to normalized levels, translating into 8%/6.5% yoy growth in gross/net cigarette sales (versus 10%/8.5% gross/net growth in 2Q). We expect cigarette EBIT growth of 6.5%, in line with net revenue growth (akin to 1H)."

Further, Kotak's note said, "In the FMCG segment, we estimate (1) 7.5% yoy revenue growth (versus 8.3%/16.1% in 2Q/1Q) as price hikes anniversarized since 2Q, (2) 70/180 bps qoq/yoy expansion in EBIT margin to 9%. We expect resilient 15% growth in hotels (EBIT margin of 21%, +160 bps qoq). Agribusiness is expected to grow by 10% yoy (base quarter impacted by ban on wheat and rice imports) while paperboards could decline by 5% yoy (weak
demand and price correction) and report EBIT margin of 17.5%."

Meanwhile, Prabhudas Lilladher in its preview note said, "Cigarette volumes likely to expand by 3% on account of high base and impact of cyclone in strategic markets of south India. Hotels is expected to show strong growth while FMCG will sustain margin expansion in a tough demand environment. ITC is expected to deliver revenue growth of 4% with EBITDA margins at 38.4%. Adjusted PAT is expected to grow by 5.2% YoY at Rs. 52.9bn."

During the second quarter of FY24, ITC reported revenue of Rs 17,549 crore, up by 3.4% YoY, while PAT stood at Rs 4,927 crore, up by 10.3% YoY. In the quarter, strong performance continues in FMCG - Others with revenue up 8.3% YoY on a high base; 2-yr CAGR @ 14.5%. Further, resilient performance in Cigarettes Segment with revenue up by 8.5% YoY and Segment PBIT up 8.0% YoY on a high base.

ITC also recorded stellar performance in Hotels Business with record high second quarter performance. Accordingly, in Q2FY24, hotel business Revenue and PBIT up 21% and 50% YoY respectively on a high base. Also, agri business segment revenue up 26.4% YoY (excl. Wheat & Rice exports) and egment PBIT up 3.3% YoY (2-yr CAGR +9.7%).

ITC is one of India's foremost private sector companies and a diversified conglomerate with businesses spanning Fast Moving Consumer Goods, Hotels, Paperboards and Packaging, Agri Business and Information Technology. The Company is acknowledged as one of India's most valuable business corporations with a Gross Revenue of Rs 69,481 crores and Net Profit of Rs 18,753.31 crores as of March 31, 2023. ITC was ranked as India's most admired company, according to a survey conducted by Fortune India, in association with Hay Group.

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