FMCG giant, ITC Ltd, is a bullish stock to add to its portfolio, especially ahead of its interim dividend whose record date is February 12. ITC is set to deliver a Rs 6.5 per share dividend. The stock below Rs 430 levels, is recommended to buy or accumulate by four brokers with Motilal Oswal setting the highest target of Rs 550 on ITC. The recommendation comes after ITC's Q3 results where revenue growth surpassed estimates driven by upbeat cigarette volumes.
ITC Share Price:
After market hours, ITC share price stood at Rs 427.30 apiece, down by 0.84% on February 10th. The company's market cap is around Rs 5,34,625.39 crore. The stock's 52-week high and low is at Rs 500.01 apiece and Rs 377.74 apiece respectively.
Some of the key positive fundamentals of ITC stock are that the company is debt-free, its price-to-equity ratio is lower at 26.54x, and its return on equity is strong at 27.45%.
ITC Dividend:
The FMCG player has announced an interim dividend of Rs 6.50 per share having a face value of Re 1 each for FY25. The dividend is going to be paid between Thursday, 6th March 2025 and Saturday, 8th March 2025 to those Members of the Company entitled thereto.
To determine eligible shareholders who will be entitled to the upcoming dividend, ITC fixed Wednesday, 12th February 2025 as the Record Date.
This will be ITC's 30th dividend since July 2001, as per Trendlyne data. In the past 12 months, the company paid up to Rs 7.50 dividend per share. Currently, it has a dividend yield of 1.76%.
ITC also has rewarded investors with bonus issues and stock splits since 2001.
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.
While 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.
ITC Stock Recommendation:
In its research note, JM Financial said, "Factoring weak Q3 and hotels demerger, we have cut our FY25-27E EPS by c.3-6%. Resilient volume & taxation stability in Cigarettes is positive; pricing actions will be key for acceleration in EBIT growth. Similarly, the pace of recovery in FMCG needs to be watched due to the heightened competitive scenario in Foods. Demerger of hotel business should reduce the capex intensity & aid improvement in ROIC. Maintain BUY, with revised TP of 515 (28x Dec'26 EPS). "
Also recommending to BUY with a Rs 515 target price, brokerage Centrum said, "Strong performance continues in premium portfolio and alternate channels while GT observed low single digit growth. Agri revenue grew 9.7% with +21.6% EBIT, whereas Paper revenue marginally up by 3.1% with cut in EBIT by 30.6%. Gross margin declined to 53.8% (-255bps) YoY due to higher leaf tobacco prices along with higher food inflation. With higher other/employee expenses +9.3%/+7.2%, EBITDA margins cut to 33.3% (-264bps). By looking 9MFY25, we have tweaked our earnings and retain BUY with a revised DCF-based TP of Rs515 (implying 28.7x FY27E EPS).
Meanwhile, Motilal Oswal suggested the highest target with BUY recommendation.
Motilal's note said, "We cut our EPS estimates by 4% for FY25 and 5% for FY26, mainly due to the demerger of the hotel business w.e.f. Jan'25," adding, "ITC's core business of cigarettes has shown steady performance. With stable taxes on cigarettes, we anticipate sustainable growth in this business. While the FMCG sector is seeing moderation due to the rising commodity prices, ITC is enjoying industry-leading growth over peers due to its category presence (large unorganized mix, under-penetrated, etc.)."
"We reiterate our BUY rating on ITC with our SOTP-based TP of INR550 (implied 30x Dec'26E P/E)," Motilal said.
On the other hand, Elara Capital suggested ACCUMULATE, and one of the key drivers for ITC that the brokerage pointed out was the no tax announcement on cigarette during Budget 2025.
Elara said, "ITC (ITC IN) delivered slightly better cigarettes volumes though lower on profitability. EBIT growth in Cigarettes and FMCG took a hit due to higher input cost, which was partly offset by agri businesses. No tax hikes were announced for cigarettes in the recently-concluded Union Budget, which is a positive for volumes. We retain our positive view as ITC continues to deliver steady growth amid subdued demand. We reiterate Accumulate with SoTP-based TP pared to INR 487."
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