FMCG stock, ITC Ltd witnessed sharp selling pressure on Tuesday so much so that the stock dipped by at least 3% on BSE. The performance comes after the GoM proposed to levy a special GST rate of 35% on tobacco and cigarettes. ITC stock has corrected steeply in the past month, down by 4% on BSE broadly. There is still a buy-on-dips opportunity in ITC and its average target price is above Rs 540.
ITC Share Price:
At the time of writing, ITC stock traded at Rs 467.35 apiece, down by 2.05% on BSE, with a market cap of Rs 5,84,692.79 crore. The stock dropped by at least 3% to hit an intraday low of Rs 462.80 apiece.
As per a report by PTI, the government is looking to propose up to a 35% special rate on tobacco and related products apart from aerated beverages. Notably, the report highlighted that the general GST tax brackets of 5%, 12%, 18%, and 28% will continue, while the 35% rate will be a new addition.
The recommendation of a special GST rate of 35% is made by the Group of Ministers (GoM), and the objective is to enhance revenue collection. The GoM aims to present the proposal to the GST Council on December 21, 2024, as per the reports.
ITC Share Buy/Sell?
As per Trendlyne data, the consensus recommendation from 35 analysts for ITC Ltd. is BUY. EPS is expected to grow by 3.1% in FY25. The average 1-year target price is at Rs 540.91 apiece, hinting at a potential 15% upside.
Among brokerages, Geojit BNP Paribas has set a Rs 524 target price on ITC with an HOLD recommendation. Anand Rathi gives a BUY rating for a target price of Rs 560, and Axis Direct also likes the stock for a target price of Rs 550. Further, BOB Capital Markets has suggested BUY for a Rs 556 target, while KR Choksey is bullish for a Rs 545 target on ITC.
Overall, in the 12-month average time frame, ITC shares have the potential to surge by 14% to 20%.
ITC Corporate Actions:
Since its listing, ITC has rewarded investors with bonus issues, stock splits and dividends over the years since its listing.
Dividends: The FMCG giant has delivered up to 29 dividends since July 2001, as per Trendlyne data. In the last 12 months, the dividend payout is Rs 13.75 per share. While its dividend yield is of 2.63%.
Stock Split: Further, ITC has carried a single stock split so far. In September 2005, ITC's shares split from Rs 10 face value to Rs 1 each, hence a ratio of 1:10.
Bonus Issues: The company has a strong track record of bonus shares. The last bonus was of 1:2 ratio in July 2016, while ITC delivered 1:1 and 1:2 bonus ratios in August 2010 and September 2005. ITC has overall delivered 3 bonus shares.
Going ahead, ITC is going to demerger its hotels business which will be in the ratio of 1:10. Because as part of the merger process, for every (Ten) Ordinary Shares of the face and paid-up value of Re. 1 each held in ITC, 1 (One) equity share of the face and paid-up value of Re. 1 in ITC Hotels. After the completion, ITC's stake will be reduced. The shareholders of ITC will hold about 60% of ITC Hotels directly, which is proportionate to their shareholding in ITC. The balance stake of about 40% will be held by ITC.
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