ITC share price tag fell 2% on Wednesday morning to trade at Rs 210 per share, following the enterprise reported a fall in fiscal quarter net profit, largely in line with expectations. ITC’s net profit in January-March quarter fell 1.28% on-year to Rs 3,748 crore. Profit fell in spite of a sharp 24% jump in gross income in the course of the quarter. FMCG-to-hotels conglomerate ITC also announced a final dividend of Rs 5.75 per share, taking the total dividend for the complete fiscal year to Rs 10.75 per share. Results have been largely in line with estimates of analysts, who retain a bullish outlook for the stock on the back of a healthful dividend yield and low-cost valuation.
Segment-sensible overall performance
-During the quarter, ITC’s cigarette organization income rose 14% on-year to Rs 5,859 crore. Cigarette volumes towards finish-FY2021 almost touched pre-Covid levels.
-FMCG organization reported a development of 16% from the preceding year with revenues clocking Rs 3,687 crore.
-ITC’s hotel’s segment saw recovery from the preceding quarter, but the overall performance was down 38% on-year. Revenue stood at Rs 287 crore.
-The agricultural organization segment saw income development of 79% at Rs 3,368 crore.
Healthy dividend yield
ITC’s board authorized a final dividend of Rs 5.75 per share along with the economic outcomes. With this the company’s dividend for the complete economic year 2021 stood at Rs 10.75 per share, translating to a dividend yield of 5.07%. “ITC has always been an attractive dividend bet for investors,” Vishal Wagh, Head of Research, Bonanza Portfolio told TheSpuzz Online.
ITC has elevated its annual dividend payout more than the years:
– FY 2020-21: Rs 10.75/share Total payout Rs 13,230 crore
-FY 2019-20: Rs 10.15/share Total payout Rs 8,422 crore
-FY 2018-19: Rs 5.75/share Total payout Rs 7,486 crore
Axis Securities expects the annual dividend paid to raise to Rs 15,078 crore by economic year 2022-23.
Outlook
Kotak Securities — ‘Buy’ Target Price: Rs 257
Kotak Securities has trimmed FY2022-23E EPS by 2-5% but nevertheless has a Buy contact on the scrip. “ITC offers a combination of inexpensive valuations (cigarettes business trading at 8-9X PE at CMP), healthy dividend yield (5% at CMP), and the promise of robust LT growth in FMCG.”
Axis Securities — ‘Buy’ Target Price: Rs 260
“We are enthused with cigarette volume recovery/normalization, improved break-even in hotels (on much lower revenues) and a structural uptick in FMCG revenues/margins.” … “Robust dividend/FCF yield of 5% remain key attraction.”
Sharekhan finds the low-cost valuation and robust dividend yield generating the stock eye-catching. “Scale up in the performance of the non-cigarette FMCG business and margin improvement would be triggers for the stock in the medium to long term. Moreover, strong cash flows and cheery dividend payout make it a good bet in the current uncertain environment,” Sharekhan mentioned.