1:10 Split, 3 Bonus, 29 Dividends: FMCG Stock ITC Falls 5% In 5 Sessions; Sharekhan Says BUY, Rs 595 Target

FMCG large-cap stock, ITC has corrected significantly between October 7-11, falling by 4.6% on BSE. Accordingly, the stock has erased its Rs 500 mark. Going ahead, ITC will be in focus for its upcoming Q2FY25 results and demerger of hotel business. YTD, the stock is up by 4.54%.

On October 11, after market hours, ITC share price closed at Rs 488.45 apiece, down by 0.72%. During this week's trading session, the stock plunged by 4.6% overall.

Following its latest correction, ITC's share price has gradually underperformed its rival Hindustan Unilever (HUL) whose YTD performance is up by 4.7%. While ITC gained by 4.5% YTD.

Going ahead, ITC has announced that a Meeting of the Board of Directors of the Company has been convened for Thursday, 24th October 2024, inter alia, to consider and approve the Unaudited Standalone and Consolidated Financial Results of the Company along with the Segment-wise Revenue, Results, Assets and Liabilities for the Quarter and Six Months ended 30th September 2024, Balance Sheet as on that date, Statement of Cash Flows for the half year ended on that date and the Notes thereto.

The latest to like ITC shares is brokerage Sharekhan who recommended buying with the highest target price of Rs 595 on the FMCG.

ITC is the preferred pick of Sharekhan due to the company's discounted valuations of 24 times its FY2026 and 22 times its 27E EPS, coupled with persistent earnings growth visibility.

Further, Sharekhan believes that ITC has a strong potential growth in non-FMCG business. In the near term, the non-FMCG business is expected to grow in the range of low to mid-teens with EBITDA margins bettering by 80-100 basis points.

For Q2FY25, Prabhudas Lilladher's preview note said, "We estimate 3% cigarette volume growth FMCG is facing demand pressure amid higher inflation and slowdown in paperboard continued. Adjusted PAT is expected to grow by 6.6% at Rs 52.52 billion."

Prabhudas Lilladher has recommended ACCUMULATE on ITC stock for a target price of Rs 541.

Also, earlier this month, Brokerage HSBC was the latest to upgrade its stance in ITC. According to the brokerage, ITC shares trade at a widened discount, contributing to the attractiveness of the company amid a volatile market, in comparison to its peers. HSBC maintained a BUY rating on ITC while increasing its target price to Rs 580.

ITC Corporate Actions:

Since its listing, ITC has rewarded investors with bonus issues, stock splits and dividends over the years since its listing.

Dividends: The FMCG giant has delivered up to 29 dividends since July 2001, as per Trendlyne data. In the last 12 months, the dividend payout is Rs 13.75 per share. While its dividend yield is of 2.63%.

Stock Split: Further, ITC has carried a single stock split so far. In September 2005, ITC's shares split from Rs 10 face value to Rs 1 each, hence a ratio of 1:10.

Bonus Issues: The company has a strong track record of bonus shares. The last bonus was of 1:2 ratio in July 2016, while ITC delivered 1:1 and 1:2 bonus ratios in August 2010 and September 2005. ITC has overall delivered 3 bonus shares.

Bonus Issues: The company has a strong track record of bonus shares. The last bonus was of 1:2 ratio in July 2016, while ITC delivered 1:1 and 1:2 bonus ratios in August 2010 and September 2005. ITC has overall delivered 3 bonus shares.

Going ahead, ITC is going to demerger its hotels business which will be in the ratio of 1:10. Because as part of the merger process, for every (Ten) Ordinary Shares of the face and paid-up value of Re. 1 each held in ITC, 1 (One) equity share of the face and paid-up value of Re. 1 in ITC Hotels. After the completion, ITC's stake will be reduced. The shareholders of ITC will hold about 60% of ITC Hotels directly, which is proportionate to their shareholding in ITC. The balance stake of about 40% will be held by ITC.