FMCG giant ITC ended the trading week from May 20th to 24th on a positive note. Although, ITC reported a mixed earnings in Q4FY24, majority of analysts have retained their outlook on the company and some even raised their target price. ITC though trading lower than its potential, has a buying opportunity for long-term wealth creation. The highest target price currently is Rs 535, which hints at a 23% potential upside.
ITC Share Price:
ITC's share price ended at Rs 436.10 apiece, down by 1.2% on BSE with a market cap of Rs 5,44,458.70 crore last week on Friday. Nonetheless, the weekly performance was positive with gains of 1.2%. YTD, ITC stock however is down by 7% on BSE.
The stock's 52-week high and low are at Rs 499.60 and Rs 399.30 apiece respectively.
ITC Dividend:
To exit FY24, ITC has recommended Final Dividend of 7.50 per Ordinary Share of 1/- each for the financial year ending 31st March 2024, subject to a declaration of the same by the Members at the ensuing 113th Annual General Meeting ('AGM') of the Company convened for Friday, 26th July 2024; the Final Dividend, if declared, will be paid between Monday, 29th July 2024 and Wednesday, 31st July 2024 to those Members entitled thereto.
The record date is fixed on June 4, 2024, for the same.
Earlier, ITC paid an interim dividend of 6.25 per share for FY24.
That being said, the total dividend payout comes to around Rs 13.75 per share. The total cash outflow on account of the Dividend (including the Interim Dividend of Rs 7,799.45 crores paid in February 2024) will be 17,162.99 crores.
ITC Earnings:
In Q4FY24, ITC's consolidated net profit came in at Rs 5,190.71 crore, down from Rs 5,406.52 crore in Q4FY23, and Rs 5,242.58 crore in Q3FY24. Consolidated revenue from operations was at Rs 19,446.49 crore, down from Rs 19,484.50 crore in Q4FY23, but marginally up from Rs 19,058.29 crore in Q3FY24.
In Q4FY24, its FMCG segment was up 7.2% on a high base and Segment PBIT was up 15% on a comparable basis (base quarter included certain fiscal incentives about previous periods); margins expanded 60 bps YoY on a comparable basis. While the cigarettes segment Q4 revenue PBIT was up 7.0% and 5.0% YoY respectively. Additionally, ITC's hotel business posted record high performance with Q4 Revenue and PBIT up 15% and 34% YoY respectively on a high base.
However, the Agri-Business Segment was impacted by trade restrictions on agri commodities with this segment's revenue de-grew 13.1% and 13.4% YoY in FY24 and Q4 respectively. Also, Paperboards, Paper and Packaging Segment remains impacted by low-priced Chinese supplies in international markets (including India), muted domestic demand, surge in wood cost and high base effect.
BUY ITC Share Price:
Emkay Global On ITC:
We maintain BUY on ITC, but lower Mar-25E SoTP-based TP to Rs510/sh (from Rs520), as we factor in near-term margin pressure for the cig business. We believe that though the LT outlook is still promising, navigating near-term challenges is crucial. With a final DPS of Rs7.5, the total DPS for FY24 stands at Rs13.75, implying a payout of 84%.
Elara Capital On ITC:
We largely retain our FY26E earnings as we increase our earnings by ~1% FY25E to factor in higher Other income. We reiterate Accumulate with a TP of INR 490 based on a SOTP method, valuing the cigarettes business at 22x FY26E P/E and the FMCG business at 6x FY26E price/sales.
Religare Broking On ITC:
ITC reported mixed numbers for the quarter. The management believes, improved demand from rural areas will augur well for a revival in consumption demand, along with that they plan to focus on the FMCG segment with innovation and premiumization and at the same time increase spending towards brand building, expanding distribution & channel reach while maintaining cost.
Meanwhile, the company is waiting for shareholders' approval for the hotel de-merger plan and it is positive for shareholders. Overall, we expect growth to be continuously driven by the cigarettes & FMCG segment and remain positive on the growth prospects ahead. On the financial front, we have estimated its revenue/ EBITDA/PAT to grow at 11.4%/12.9%/13.3% CAGR over FY24-26E. Thus, maintaining our Buy rating and a target price of Rs 535.
Global Brokerages On ITC:
CLSA has maintained outperform on ITC for Rs 470 target price, while Investec has suggested BUY and raised its target price to Rs 504 on the company.
Further, Citi has maintained BUY on ITC while raising its target price to Rs 515. Morgan Stanley has an Overweight company while the target price is Rs 506. Also, Goldman Sachs maintains BUY on ITC for a target price of Rs 480.
ITC 10:1 Split Ahead:
ITC is demerging its hotels business in the ratio of 10:1. Giving a demerger update, ITC said, " Post obtaining no-objection from stock exchanges, Scheme of Arrangement for demerger ('the Scheme') was filed with National Company Law Tribunal (NCLT). NCLT has directed convening a meeting of shareholders of ITC on June 6, 2024, to consider and approve the Scheme."
The split-up of the hotel business from ITC will be in the ratio of 10:1. Meaning, for every (Ten) Ordinary Share 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
Other Key Factors:
Stock Split: ITC has split only once in the ratio of 1:10 and that was done in September 2005. ITC split 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.
Bonus Shares: The first bonus issuance was in September 2005, for a 1-to-2 ratio. 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.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor 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.
Click it and Unblock the Notifications
Sign in with Google