1:10 Split, 2 Bonus, 28 Dividends: FMCG Giant ITC Falls 11% YTD, Prabhudas Lilladher Latest Recommendations

FMCG giant, ITC has been the talk of the town with share price witnessing significant push and pull. On Wednesday, ITC shares crossed its 10-Day, 20-Days, and 30-Days SMAs, however, was below five SMAs out of 8. ITC share which was among star perfofrmer of FMCG sector in 2023, has seen broadly bearish tone since start of 2024. ITC stock's biggest news this month was a block deal carried by one of its largest shareholders British American Tobacco Plc.

Going ahead, brokerages are broadly optimistic about ITC shares, however, Prabhudas Lilladher recommends short-term exits.

In its technical report, Prabhudas Lilladher on March 20th said, "ITC LTD our Technical Pick BUY given at 420 on 15-Mar has now trading at 411 - one can exit."

This means that Prabhudas' long-term target of Rs 470 was set when ITC ranged around Rs 420, however, the stock has slipped below that level. And hence, the brokerage suggests exit.

Earlier, on March 15, Vaishali Parekh, Vice President - Technical Research at Prabhudas Lilladher said, "The stock has given a decent correction from the peak level of Rs 480 and has bottomed out near Rs 398 zone. Currently, after a short consolidation, it has improved the bias with a positive candle."

Parekh's note further said, "The RSI is well placed and has shown a trend reversal with the potential to rise further in the coming days. With the chart looking good, we suggest buying this stock for an upside target of Rs 470 while keeping a stop loss of Rs 405."

As per Trendlyne data, ITC shares weekly average delivery volume is 83.07%, while it is trading below 5 out of 8 SMAs, and also below 4 out of 9 Oscillators in the bearish zone.

ITC share is above its 10-day SMA of Rs 413, 20-day SMA of Rs 411.2, and 30-day SMA of Rs 411.2. While it is trading below 5-day, 50-day, 100-day, 150-day, and 200-day SMA.

This hints at a bearish tone ahead in the near term in ITC shares.

How does a simple moving average (SMA) help in understanding a stock's movement? As per Nirmal Bang, the simple moving average is an easy method to calculate the moving average. It adds up the five current daily prices and divides them with the number five.

The brokerage further explained that if the price of a particular stock goes above the moving average, it means that the price is in an upward trend. On the other hand, if the price of a particular stock falls below the moving average, it is an indication that the price is in a downward trend.

On BSE, ITC share price stood at Rs 415.70 apiece on March 20, up by 1.51% with a market cap of Rs 5,18,854.72 crore. The stock is a couple of rupees away from its 52-week high of Rs 499.60 apiece and a 52-week low of Rs 374 apiece.

ITC Corporate Affairs:

ITC carried stock splits only once so far. It was on September 21, 2005, when ITC turned ex-split for splitting its 1 equity share into ten equity shares. The face value was trimmed to Re 1 from Rs 10, hence, a stock split ratio of 1:10.

Additionally, ITC also turned ex-bonus for a 1-to-2 ratio on September 21, 2005. This meant that ITC awarded 1 new bonus share on the existing two equity shares. ITC further declared a 1:1 bonus issue in August 2010, and a 1:2 ratio in July 2016.

Moreover, since July 2001, ITC has delivered up to 28 dividends to its investors. The latest payout was last week of a 625% interim dividend aggregating to Rs 6.25 per share for FY24. In the last 12 months, ITC has paid up to Rs 15.75 per share dividend. On the current market price, ITC shares have a dividend yield of 3.8%.

Last week, JP Morgan maintained an overweight on ITC share price for a target price of Rs 490/sh with a positive outlook. On the contrary, maintaining a neutral outlook, Jefferies recommends to hold ITC shares for a target price of Rs 430. Accordingly, analysts have mixed opinions on ITC.

Also, on March 13, British American Tobacco Plc announced that it had completed the block trade of 436,851,457 ordinary shares (the "Block Trade Shares") in ITC Limited ("ITC") to institutional investors by way of an accelerated book build process (the "Block Trade"). The Block Trade Shares represent c.3.5 per cent of ITC's issued ordinary share capital.

BAT added, "This will enable the allocation of operating cashflow to fund investment in our transformation, continue to deleverage towards our new target range of 2-2.5x adjusted net debt / adjusted EBITDA, while also maintaining a progressive dividend and supporting a sustainable share buyback."

Post the block deal, BAT still holds a 25.5% stake in ITC.

ITC does have the potential to cross the Rs 500 mark. Motilal Oswal has suggested BUY on ITC for a target price of Rs 515. Additionally, BOB Capital Market has a buy call for a target price of Rs 532, while KR Choksey has set the highest target price of Rs 533.30 on ITC. The highest potential upside is seen at about 27.3% in ITC going forward.

Even as per Trendlyne data, the average target price on ITC for 1 year is set at Rs 502, implying a 21% potential upside ahead. The consensus recommendation from 35 analysts for ITC Ltd. is BUY. EPS is expected to grow by 7.7% in FY24.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.