ITC Shares Plummet to Nine-Month Low Pre-Interim Dividend
Investors in ITC were met with disappointment as the stock hit a nine-month low just before turning ex-dividend. On June 4, 2024, ITC shares closed at Rs 415.40, marking the lowest point in nine months. The previous day had seen the stock end 2.07% lower at Rs 418.45 on the Bombay Stock Exchange (BSE). With a market capitalization of Rs 5.23 lakh crore, a total of 9.10 lakh shares of the FMCG giant were exchanged, totaling a turnover of Rs 38.41 crore on the BSE.
Interim Dividend Declared Amidst Declining Returns
The tobacco-to-hotels conglomerate had recently declared an interim dividend of Rs 6.50 per share of Rs 1 each for the fiscal year 2025. The record date to determine eligible members was set for February 12, 2025. Over the years, ITC has declared a total of 29 dividends since July 3, 2001. Despite the dividend declaration, ITC stock had been facing challenges, delivering double-digit returns of 19.13% over two years, while slipping 8.59% in 2025 and losing 10.77% in the past six months. Currently, the stock hovers near its 52-week low of Rs 377.4, reached on March 12, 2024.
Expert Insights and Projections
The technical analysis of ITC shares indicated a weakening trend, with the stock trading below various moving averages, including the 5-day, 10-day, and 200-day averages. The stock’s price-to-earnings (PE) ratio of 25.35 compared to the sector’s PE of 26.07, while its price-to-book ratio stood at 6.96. Despite these metrics, the relative strength index (RSI) of ITC stock was at 35, suggesting it was neither overbought nor oversold.
One financial institution, JM Financial, maintained a buy call on ITC with a price target of Rs 515. The brokerage emphasized the importance of monitoring the pace of recovery in the fast-moving consumer goods (FMCG) sector, particularly in Foods, due to increased competition. They also highlighted the potential benefits of the demerger of the Hotels business in reducing capital expenditure intensity and improving return on invested capital.
Another brokerage, Nuvama, set a price target of Rs 571 for ITC stock but remained cautious in the short term due to ongoing urban slowdown, inflation in key raw materials, and weak profitability in the FMCG and paperboards, paper & packaging segments. Meanwhile, Nirmal Bang held a hold rating on the stock with a price target of Rs 480, expressing optimism for ITC from a medium-term perspective but acknowledging limited upside potential.
Regarding ITC’s Q3 results, the brokerage noted a mixed bag of outcomes, with cigarette volume growth surpassing expectations while margins for the cigarette and other FMCG segments faced significant pressure.
In conclusion, while the current scenario for ITC shares may seem concerning to investors, expert opinions and projections offer a glimpse of hope amidst the challenges. As always, it is essential for investors to seek guidance from qualified financial advisors before making any investment decisions.
