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ITC Shares Gain 3% a Day Ahead of Turning Ex-Dividend; Key Details Investors Should Know

By: Aparna Deb


Last Updated: February 14, 2023, 13:37 IST

New Delhi, India

ITC shares surge 3%

ITC shares surge 3%

ITC surged 3 per cent at Rs 384.55 on the BSE in Tuesday’s intra-day trade, ahead of record date for an interim dividend

ITC Dividend: Shares of the FMCG gaint ITC surged 3 per cent at Rs 384.55 on the BSE in Tuesday’s intra-day trade, ahead of record date for an interim dividend of Rs 6 per share.

ITC has declared an interim dividend of Rs 6 per share for the financial year 2022-23. In the past 12 months, ITC has declared an equity dividend amounting to Rs 6.25 per share. At the current stock levels, this results in a dividend yield of 1.66 per cent.

When a company goes ex-dividend on a particular date, its stock does not carry the value of the next dividend payment. Usually, an ex-dividend date is set one or two days before the record date.

The company has fixed 15th February 2023 as record date for interim dividend payment for the financial year 2022-23.

ITC informed about the interim dividend citing, “The Board of Directors of the Company at the meeting held today, i.e. 3rd February, 2023 - (a) declared Interim Dividend of Rs. 6/- per Ordinary Share of Re. 1/- each for the financial year ending on 31st March, 2023; such Dividend will be paid between Friday, 3rd March, 2023 and Sunday, 5th March, 2023 to those Members entitled thereto. (b) fixed Wednesday, 15th February, 2023 as the Record Date for the purpose of determining entitlement of the Members for such Interim Dividend."

After trading rangebound over the past few years, ITC took off last year, delivering 74 per cent returns to investors. So far this year, it has been among the top Nifty performers, with 15 per cent returns year-to-date.

In past one month, the stock has zoomed 17 per cent, as compared to less than 1 per cent rise in the S&P BSE Sensex. The brokerages believe that the proposed tax hike on cigarette in the Union Budget 2023 is not very high and would be easily passed on through small price increases.

The cigarette-to-hotel conglomerate reported a 21 per cent year-on-year (YoY) rise in net profit for the quarter ended December to Rs 5,031 crore. Revenue from operations, net of excise duty, rose a meagre 2.3 per cent on year to Rs 16,226 crore and trailed estimates of Rs 16,810 crore.

ITC said that the economic activity continued to gather momentum with sequential moderation in commodity inflation, even as core inflation remained elevated. However, rural demand continued to be relatively subdued, they said, while improving sequentially.

“The volume stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, continued to enable volume recovery for the legal cigarette industry from illicit trade leading to higher demand for Indian tobaccos," the management added.

According to Trendlyne data, ITC has an average price target of Rs 417.29, representing an upside of 8.85 per cent from the current levels.

ITC continues to see strong growth in cigarette volumes with market share gains & robust traction in Rs 10/stick price point cigarettes. “We believe this segment is witnessing strong 20-25 per cent growth. Stable taxation over the last five years have led to the volume recovery specifically in post Covid period. Further crackdown on illicit cigarettes has also helped legal cigarettes industry to gain volumes & market share,” ICICI Securities said in result update.

“Given, tax increase in budget 2023 is insignificant, ITC would continue to witness strong volume growth in cigarette business in future. We change our volume growth estimate from 13 per cent to 17 per cent in FY23E. Further, we expect 5 per cent cigarette volume growth in FY24,” the brokerage firm said.

ITC has also benefited by strong growth in hotels, paperboard & FMCG businesses with significant improvement in margins due to strong hotels occupancies, higher pricing growth in paperboard & operating leverage in FMCG business, analysts said with maintain BUY recommendation with a revised target price of Rs 450 per share from earlier Rs 405 per share.

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    first published:February 14, 2023, 13:37 IST
    last updated:February 14, 2023, 13:37 IST