1:10 Split, 3 Bonuses, 625% Dividend: FMCG ITC Gives 7,860% Returns From Rs 5; 9 Brokerages Recommend BUY

FMCG ITC Ltd which is racing to become India's largest FMCG in terms of market value, is back in the centre stage as the company will announce its Q4 results for FY24 soon. ITC is undervalued, meaning, it has more upside potential. The highest target price in ITC is Rs 555. Currently, there are a total of 8 brokerages who are recommending buying this FMCG giant.

It needs to be noted that despite undervaluation, ITC has made investors rich in the long run. The stock's all-time gains are a whopping 7,908.40% since mid-July-1995. At that time, ITC was merely a little over Rs 5.

Now, ITC shares were at Rs 426.65 apiece on April 1st with a market cap of Rs 5,35,906.67 crore. In the pre-market opening of Tuesday, the stock was near Rs 429.25.

ITC is surely a couple of thousand crores away from gaining the title of top FMCG from Hindustan Unilever whose market cap is around Rs 5,37,774.45 crore currently.

Nevertheless, the stock is still cheaper by 15% from its 52-week high of Rs 499.60 apiece, while it is up by 13% from its 52-week low of Rs 378.60 apiece. There are signs of a 30% potential upside in ITC ahead.

Here are the target prices of 8 brokerages on ITC:

The latest is Motilal Oswal who recommended buying for a target of Rs 500.

Sharekhan is another brokerage that recently recommended buying for a target price of Rs 515. While giving this target, Sharekhan in its note said that major uncertainties hovering around the stock are over, as BAT has sold a 3.5% stake in the company. BAT is unlikely to reduce its stake below 25%. Further, the brokerage said, "Business fundamentals of ITC are intact with steady growth in the core cigarette business and noncigarette FMCG business witnessing consistent improvement in EBITDA margins." Also, it added, "Efficient capital allocation plan and strong dividend payout make it a preferred pick in the large-cap FMCG space with attractive valuations."

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.

Kotak in its latest note for ITC's Q4 results, said, "We expect cigarette EBIT growth of 3.5%, marginally below net revenue growth," In the FMCG segment, we estimate (1) 7.7% yoy revenue growth (versus 7.6%/8.3%/16.1% in 3Q/2Q/1Q) with no major sequential price adjustments."

Finally, JP Morgan has maintained an Overweight on the Company for a target price of Rs 490/share with a Positive outlook.

ITC Dividend:

Earlier, in February, ITC turned ex-dividend 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.

ITC Bonus Shares:

The FMCG giant has paid bonus shares reward thrice since its listing. 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.

ITC Stock Split:

Heavyweight ITC announced a stock split only once in two decades. It was on September 21, 2005, when ITC turned ex-split for splitting 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.

In Q3FY24, ITC's Gross Revenue stood at Rs.17,483 crores representing a growth of 2.1% YoY (excl. Agri-Business: up 3.9%) while PBT (before exceptional items) at Rs. 6,731 crores grew by 0.8% YoY. PAT grew by 10.8% YoY to Rs. 5,572 crores. Earnings Per Share for the quarter stood at Rs. 4.47 (previous year Rs. 4.06).

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor 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.