In a move sure to warm the hearts of shareholders, Indian FMCG giant ITC announced an interim dividend of ₹6.25 per share for the financial year ending March 31, 2024. This comes alongside the release of the company’s Q3 results, which paint a mixed picture of growth and stagnation. Let’s delve deeper into the details and assess what these developments mean for ITC’s share price and investor sentiment.
A Consistent Track Record of Rewarding Shareholders
ITC boasts a commendable track record of dividend payouts, having rewarded investors for the past five years. This latest announcement of ₹6.25 per share interim dividend, payable between February 26-28, 2024, reinforces their commitment to shareholder value. It’s worth noting that this follows a final dividend of ₹6.75 declared in May 2023 and an interim dividend of ₹6 declared in February 2023.
Q3 Performance: A Mixed Bag
While the dividend news brings cheer, ITC’s Q3 results offer a nuanced picture. The company’s net profit for the quarter grew 6% year-on-year to ₹5335 crore, compared to ₹5006 crore in the previous year’s corresponding quarter. Revenue from operations also saw a marginal increase of 2% to ₹19484 crore.
However, a closer look reveals some areas of concern. EBITDA (earnings before interest, taxes, depreciation, and amortization) fell by 3.2% compared to the previous year, and margins slipped from 38.4% to 36.6%. Additionally, the cigarette segment, a key contributor to ITC’s revenue, witnessed disappointing volume growth.
Brokerage Views: Buy, Sell, or Hold?
Following the Q3 results and dividend announcement, market analysts have offered varying perspectives on ITC’s stock. Nuvama, a top brokerage firm, maintained a “Buy” rating but revised the target price downwards from ₹560 to ₹535. They cited lower-than-expected EBITDA and sluggish performance in the cigarette segment as reasons for the adjusted target.
However, Investec, another prominent brokerage house, retained a “Buy” rating with a target price of ₹499. While acknowledging the subdued Q3 performance, they expressed optimism about potential revenue growth in the first quarter of FY25.
Looking Ahead: Dividend Delight and Challenges Remain
ITC’s latest dividend announcement undoubtedly brings welcome cheer to investors. The consistent dividend payouts demonstrate the company’s commitment to shareholder value creation. However, the mixed Q3 results highlight underlying challenges in key segments like cigarettes. Going forward, investors will closely monitor ITC’s ability to address these challenges and drive sustainable growth while maintaining its attractive dividend policy.
A Cautiously Optimistic Outlook
For investors considering ITC Ltd. share price, the picture remains nuanced. While the dividend announcement is a positive signal, the mixed Q3 performance and analyst perspectives present a complex scenario. Careful analysis of future performance, particularly in the cigarette segment and cost management strategies, will be crucial before making investment decisions. Ultimately, ITC’s ability to navigate these challenges and capitalize on potential growth opportunities will determine its future trajectory and investor sentiment.
