3 Bonus, 1:10 Split, 625% Dividend: FMCG ITC Stock To Make You Rich; Buy For Short-And-Long Term Targets!

FMCG giant, ITC has received both short-term and long-term recommendations. The latest will be from Axis Securities intraday call which recommends buying for a target price of Rs 440. HDFC Securities has also suggested BUY on the stock. ITC shares are down by 8% on BSE year-to-date, giving a buy-on-dips opportunity.

As per Axis Securities Buy Now, Sell Tomorrow pick, the entry point in ITC shares is Rs 431 for the 1-day target of Rs 440 with a stop loss of Rs 428. Currently, ITC is well-within that buying range.

On BSE, the stock ended at Rs 430.10 apiece, down by 1.6% after market hours of April 12 with a market cap of Rs 5,36,967.87 crore. Despite the latest fall, ITC shares weekly performance has been on the upside of 2%. In a month, ITC gained by 2.5%.

However, ITC shares are down by over 4% in six months, and YTD, the drop is nearly 8%. In a year though, the stock has gained by 7.5%. So ITC is undervalued!

The stock's 52-week high and low is at Rs 499.60 apiece and Rs 392.10 apiece. The next big factor to drive ITC shares will be its Q4 earnings.

The 1-year average target of ITC is Rs 502 apiece, hinting at a potential 17% upside. As per Trendlyne data, the consensus recommendation from 34 analysts for ITC Ltd. is BUY.

Some of the renowned brokerages that have recently recommended on ITC are:

Motilal Oswal has recommended buying for a target of Rs 500.

Also, Sharekhan is another brokerage that recently recommended buying for a target price of Rs 515. While giving this target, Sharekhan in its note said that major uncertainties hovering around the stock are over, as BAT has sold a 3.5% stake in the company. BAT is unlikely to reduce its stake below 25%. Further, the brokerage said, "Business fundamentals of ITC are intact with steady growth in the core cigarette business and noncigarette FMCG business witnessing consistent improvement in EBITDA margins." Also, it added, "Efficient capital allocation plan and strong dividend payout make it a preferred pick in the large-cap FMCG space with attractive valuations."

Moreover, recommending buy, JM Financial has so far set the highest target price of Rs 555 on ITC. KR Choksey has the next big target of Rs 533 on ITC, while BOB Capital Markets set a target of Rs 532. Also, HDFC Securities has set a target of Rs 460. Meanwhile, Antique Stock Broking has set a target of Rs 488 apiece, and Kotak Institutional Equities set a target of Rs 460 too.

Among global brokerages, JP Morgan has maintained an Overweight on the Company for a target price of Rs 490/share with a Positive outlook.

ITC Corporate Affairs:

In 2024, ITC turned ex-dividend in February for an interim dividend of Rs 6.25 per share or 625% having a face value of Re 1 each for the financial year ending on 31st March 2024. As per Trendlyne data, since July 2001, ITC has delivered up to 28 dividends to its investors. In the last 12 months, ITC has paid up to Rs 15.75 per share dividend.

Meanwhile, the heavyweight stock has also distributed bonus shares rewards thrice since its listing. 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.

In the case of stock splits, the FMCG player turned ex-split only once. 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.

In Q3FY24, ITC's Gross Revenue stood at Rs.17,483 crores representing a growth of 2.1% YoY (excl. Agri-Business: up 3.9%) while PBT (before exceptional items) at Rs. 6,731 crores grew by 0.8% YoY. PAT grew by 10.8% YoY to Rs. 5,572 crores. Earnings Per Share for the quarter stood at Rs. 4.47 (previous year Rs. 4.06).

Key fundamentals of ITC shares are broadly positive except for its undervaluation compared to its sector. Here are the details as per Trendlyne data:

- Stock Price rose 9.29% and underperformed its sector by 30.1% in the past year.

- Debt to Equity Ratio of 0 is less than 1 and healthy. This implies that its assets are financed mainly through equity.

- Mutual Fund Holding increased by 0.26% in the last quarter to 9.66.

- Price to Earning Ratio is 26.18, lower than its sector PE ratio of 29.96.

- Return on Equity(ROE) for the last financial year was 27.75%, more than 20% in the last financial year, indicating an efficient use of shareholder's capital to generate profit.

- Interest Coverage Ratio is 639.94, higher than 1.5. This means that it can meet its interest payments comfortably with its earnings (EBIT).

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, 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.