With Rs 9.50/Share Dividend, This Large Cap Stock Gets A 'Buy' Rating From Top Brokerage Firms For High Return

Leading stock-broking firms Motilal Oswal and Parbhudas Lilladher have given a buy rating on the stock of ITC. Recently, the company declared a dividend of Rs 9.50 per share. Both the brokerage firms feel that investing in this stock can lead to significant gains over a while.

Dividend Details

Through the securities exchange filing, ITC made the dividend announcement on May 18. As per the filing, the Board of Directors recommended a final dividend of Rs 6.75 per share and a special dividend of Rs 2.75 with a face value of Re 1 each for the financial year ended March 31 2023, subject to its approval in the ensuing Annual General Meeting (AGM) of the Company.

Together with the interim dividend of Rs 6 per share declared by the Board on February 3, 2023, the total dividend for the financial year ended March 31, 2023, would be Rs 15.50. The final dividend, if declared, will be paid between Monday, August 14, 2023, and Thursday, August 17, 2023, to those members entitled thereto.

The company has fixed Tuesday, May 30, 2023, as the record date to determine the entitlement of the Members for payment of dividends.

Prabhudas Lilladher sets target price at Rs 455

Although FMCG margins got a boost due to PLI and State incentives, FY24 should gain from benign input costs. Hotel outlook is positive due to G20 & revival in business and foreign tourist travel, believes the firm. The paper & paperboard segment was impacted due to weakness in the market coupled with expansion-related shutdowns, expect margins to recover from 4Q levels.

"While the near-term outlook is strong, we estimate 10.7% EPS CAGR over FY23- 25. ITC has the scope to increase cigarette profitability as current EBITDA margins are 5ppt lower than peak margins. ITC trades at 22.8x FY25 EPS with ROE/ROCE of 30%+/35%+ and ~80%+ dividend payout. We increase our FY24/FY25 EPS by 1.6%/1.4% and target price to Rs 455 (Rs 444 earlier) as we roll over to FY25," said the broking firm.

Motilal Oswal sets the price at Rs 485

"ITC posted a healthy ~24% EPS growth in FY23 and we expect an EPS CAGR of ~15% over the next two years. ITC's earnings outlook is better compared to other large cap staples players in FY24 and FY25," as per Motilal Oswal's research note.

Further, the broking firm added, at a time when uncertainty looms over the industry due to high inflation, unpredictable monsoons and continued weak rural sales, ITC's earnings performance in the last couple of years has shined like a beacon.

"The stock has done exceptionally well in Jun'22 with ~60% appreciation, while consumer peers, both staples and recently, discretionaries have struggled. ITC's dividend yield is healthy at 3.5-4% despite the stock price appreciation," the note added.

Scrip Movement

The last closing price of ITC stock is Rs 419.90 per share, which has risen marginally by 0.06% over the previous day's closing. In the last one year, the share price has surged by 52.94% while over the last three years, it has grown rapidly by 138.92%.

Disclaimer

The stock has been picked up from the brokerage reports of Prabhudas Lilladher and Motilal Oswal. Greynium Information Technologies, the author and the brokerage firms are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.