FMCG ITC Stock Is A Smoking Hot Bet With A 1:10 Split, 1:1 & 1:2 Bonus, 3.85% Yield, Prabhudas Lilladher Suggests BUY

Big FMCG company ITC is back and hotter than ever. Prabhudas Lilladher has advised purchasing on ITC with a target price of Rs 465 per share this time. In excess of 16% of ITC’s current market price would be obtained from this. ITC had a large pullback after its stellar performance in 2023, which made it cheap and suggested a buy-on-dips opportunity.

ITC is up a single digit 8.54% from its 52-week low of Rs 369.70 each, but it is now trading 20% down from its 52-week high of Rs 499.60 apiece.

ITC has a market value of Rs 5,00,881.40 crore and was trading at Rs 401.40 a share on the BSE at the time of writing, down 1.95%. The stock began at the day’s high of Rs 405.85 per share and is now trading close to its intraday low of Rs 399.30.

The manufacturer of Lucky Strike cigarettes, British American Tobacco, may be trying to sell a part of its ownership in ITC Ltd., according to rumors, which might be the cause of the most recent decline in ITC shares.

Since ITC’s long-term goal is to reach Rs 500, there are more buying opportunities the lower the stock goes.

Moreover, Trendlyne data shows that ITC has underperformed its industry by 35.29% over the last 12 months. However, ITC’s other fundamentals are all strong, with a robust return on equity (ROE) of 27.75%, a price-to-earnings ratio of 24.49, which is lower than the sector, and a healthy debt-to-equity ratio of 0 (less than 1).

Amidst this, on March 11, Vaishali Parekh, Vice President – Technical Research at Prabhudas Lilladher, said, “The stock has bottomed out near the 398 zone and has given a decent correction from the peak level of 480.” After a brief consolidation, the bias has now improved with a positive candle.”

Parekh went on, “The RSI is in a good position, has reversed its trend, and might move further higher in the days ahead. Given the favorable appearance of the chart, we advise purchasing this stock with a stop loss of R396 and an upside objective of 465.”

However, ITC is about to become hotter! According to Trendlyne, the average one-year target price for ITC is Rs 502, which suggests a tremendous 25% upside ahead. 35 analysts have recommended buying ITC as a whole. In FY24, ITC’s EPS is predicted to increase by 6.7%.

Additional important ITC factors: The FMCG company has only once in the last 20 years declared a stock split. ITC became ex-split on September 21, 2005, after dividing its one equity share into 10 equity shares. A stock split ratio of 1:10 resulted from the face value being reduced from Rs 10 to Re 1.

On September 21, 2005, ITC also became ex-bonus for a 1-to-2 ratio. In light of the two equity shares that were already in place, ITC granted one new bonus share. In August 2010, ITC also announced a 1:1 bonus issuance; in July 2016, it announced a 1:2 ratio.

Furthermore, ITC has paid its stockholders up to 28 dividends since July 2001. The most recent distribution, a 625% interim dividend of Rs 6.25 per share for FY24, took place last week. ITC has paid a dividend of up to Rs 15.75 per share throughout the last 12 months.

The dividend yield on ITC shares is 3.85% based on the current market price.

Despite the above-mentioned difficult macroeconomic and operational environment, as well as a large base impact in several of its operating areas, the Company produced a strong result in Q3FY24.

Gross revenue for the quarter was Rs. 17,483 crores, up 2.1% YoY (excluding Agri Business, which increased by 3.9%), while PBT (before extraordinary items) increased by 0.8% YoY to Rs. 6,731 crores. PAT increased to Rs. 5,572 crores, YoY by 10.8%. For the quarter, earnings per share were Rs. 4.47 (compared to Rs. 4.06 in the prior year).

Notice: The market experts who have made the following suggestions do not represent Greynium Information Technologies or the author. If judgments were made based on this article, neither Greynium nor the brokerage company, the author, would be held responsible for any resulting damages. Before making any financial decisions, consumers are advised by Goodreturns.in to speak with qualified professionals.