ITC Ltd, the cigarette and FMCG products maker, is in the limelight as it has made a big announcement. ITC's subsidiary has intimated to the company about agreeing to acquire 100% of Blazeclan Technologies for Rs 485 crore. ITC is a long-term wealth creator and the majority of experts have given buy recommendations. In April 2024, ITC will be among the top bets to add to your portfolio.
ITC Share Price:
After the acquisition announcement, ITC shares have ended at Rs 424.80 apiece, up by 1.40% on BSE with a market cap of Rs 5,30,350.97 crore. The stock price has a 52-week high and low of Rs 499.60 and Rs 499.60 apiece respectively.
ITC's stock is down over 9% YTD, while its yearly performance fetched single-digit growth of 6%. Its 5-year performance is an upside of 39.44%.
ITC Stock Technicals:
Broadly, its moving averages are steady, and the stock continues to trade under-value, giving a buy-on-dips opportunity. As per Trendlyne data, the Day Momentum Score is at 42.64, which means that the stock is technically neutral. Stocks with a score above 70 are considered technically Strong and below 35 are considered weak.
Further, the data highlighted that its RSI and MFI are at 50.9 and 42.3 also steady since these moving averages below 30 are considered oversold and above 70 overbought. The weekly average delivery volume is 52.05%, while ITC shares are trading below 6 out of 8 SMAs, and below 4 out of 9 Oscillators in the bearish zone.
ITC Big Announcements:
ITC has signed a whopping Rs 485 crore deal. It announced that its wholly-owned subsidiary ITC Infotech has entered into a Share Purchase Agreement for the acquisition of 100% of the share capital of Blazeclan Technologies Private Limited.
Blazeclan is a born-in-the-cloud consulting company providing cloud services on AWS, Azure and GCP, and has been recognized as a Niche Player in the 2023 Gartner Magic Quadrant for Public Cloud IT Transformation Services.
In its regulatory filing, ITC said that this acquisition is expected to augment ITC Infotech's capabilities to service its customers in a multi-cloud and hybrid cloud environment with a focus on the Partner ecosystem to accelerate future growth.
Further, the acquisition is expected to strengthen ITC Infotech's commitment to helping clients navigate their digital transformation journey and deliver business outcomes built on the foundation of strong Cloud capabilities.
The proposed acquisition is expected to be completed in 6 to 8 weeks, subject to completion of the customary closing conditions. The deal is for a consideration of Rs 485 crore.
ITC Share Investment Ideas:
Adding ITC to its top picks for April 2024, Motilal Oswal said that the resilient nature of ITC's core business amid an uncertain environment in the sector, along with a 3-4% dividend yield, makes it a good defensive bet in the ongoing volatile interest rate environment.
The brokerage further pointed out that the performance of other FMCG segments remained resilient, with 7.3% revenue growth. The contribution of digital and modern trade businesses was significant at 31% of revenue. While the agriculture business is focused on trading and a new nicotine plant is set to commence operations in Mar'24.
"The earning CAGR at the PBT level stood at 8.5% over FY18-23. We expect ITC to post a c.7% earnings CAGR over FY24-26," Motilal's note added.
Among the key risks, Motilal said that rising competitive pressure (local, regional players) and weak demand could be a drawback for ITC.
Motilal Oswal has set a target of Rs 500 on ITC.
Other target prices before Q4 are:
Further, 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. Also, Sharekhan is another brokerage that recently recommended buying for a target price of Rs 515.
As per Trendlyne data, the consensus recommendation from 34 analysts for ITC Ltd. is BUY.
ITC Corporate Actions:
Dividend: At the latest, 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.
Stock Split: ITC carried a 1:10 split ratio 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 Issue: 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 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.
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