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This debt free stock hits 52-week high in trade today, buy to get dividend of 625%

ITC is now trading higher than the 5 days, 20 days, 50 days, 100 days, and 200-day moving averages which indicate that the stock is in a bullish phase, and is a debt-free stock with a debt-to-equity ratio of zero.Premium
ITC is now trading higher than the 5 days, 20 days, 50 days, 100 days, and 200-day moving averages which indicate that the stock is in a bullish phase, and is a debt-free stock with a debt-to-equity ratio of zero.

ITC Ltd shares hit a 52-week-high today after reporting its financial results for the fourth quarter ended in March 2022. The stock achieved a 52-week high of 282.35 per share in intraday trading on Friday morning trades.

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ITC Ltd shares hit a 52-week-high today after reporting its financial results for the fourth quarter ended in March 2022. The stock achieved a 52-week high of 282.35 per share in intraday trading on Friday morning trades, and the stock has been rising for the previous 5 days, returning 8.19 per cent. ITC is now trading higher than the 5 days, 20 day, 50 days, 100 day, and 200-day moving averages which indicates that the stock is in a bullish phase, and is a debt-free stock with a debt-to-equity ratio of zero.

The company's financial performance for the quarter ending March 2022 was favourable, resulting in the recommendation of a final dividend of Rs.6.25 per share (625%) if declared at the Company's 111th Annual General Meeting (AGM), the final dividend will be paid between Friday, July 22nd, and Tuesday, July 26th, 2022., and ITC is presently dealing at a high ROCE of over 33%, with a high P/E of 22 times and a low P/B of 5.5. The stock has returned 35.27 per cent on the NSE in the last year, considerably outperforming the (BSE 500) gains of 9.52 per cent. The company has a year-to-date (YTD) upside gap of 27.80 per cent, while the benchmark sensex is down 8.28 per cent.

The brokerage firm Sharekhan has given the stock a buy rating with a target price of Rs. 320, based on the company's strong performance. Cigarette overall sales are expected to grow further, according to the brokerage, as the government has not raised tobacco taxes for the second year in a row.

The brokerage has said in a report that “ITC put up a resilient show in Q4FY2022 with all businesses posting double digit revenue growth in Q4FY22. Gross revenues (including other operating income) grew by 16% y-o-y to Rs. 16,426.0 crore with a 10% growth in the cigarette business, strong 30% growth in Agri business and 32% growth in the paperboard, paper and packaging (PPP) business. Excluding agri business the gross revenues was up by 13.9% in Q4. Gross margins decreased by 117BPS due to higher inflationary pressures. OPM stood flat y-o-y at 13.6%. Operating profit and PAT grew by 16.8% y-o-y and 11.8% y-o-y, respectively. For FY2022, Revenues grew by ~23% (excluding agri business grew by 16.6%) and PAT grew by 15%. Total dividend for FY2022 stood at Rs. 11.5 per share vs. Rs. 10.75 per share in FY2021."

“Cigarette sales volume are expected to improve in the coming quarters. ITC has enhanced focus and redefined growth strategies for all its business vertical to improve growth prospects in the medium to long term. The stock is currently trading at 18.0x and 16.3x its FY2023E and FY2024 EPS, which is at a discount to some large consumer goods companies. Strong earnings visibility with improving growth prospects of core cigarette business and margin expansion in non-cigarette FMCG business and a high cash generation ability with strong dividend payout (dividend yield of 4.3% in FY2022) will reduce the valuation gap in the coming years. We maintain Buy on the stock with a revised price target of Rs. 320," Sharekhan has said in a report.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

 

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