ITC stock jumps nearly 3% ahead of its ex-dividend date on Wednesday, why analyst upbeat on it?

Shares of ITC – a cigarette-to-hotel conglomerate – have jumped nearly 3 per cent on the BSE ahead of the ex-date of the interim dividend on Wednesday, February 15, 2023 – the same day of the record date.

Trading near its all-time high level, ITC share price quoted at Rs 385.6 per share, up Rs 11 or 3 per cent at around 01:40 PM on Tuesday from Monday’s closing price of Rs 374.10 per share.

The stock had touched Rs 388.20 per share earlier last week on February 6, 2023, and it has gained nearly 7 per cent since February 1, 2023 – the Budget Day. The counter made a day’s high-low level range of Rs 385.30 - 373.75 per share on the BSE

ITC Interim Dividend

ITC announced an interim dividend to its shareholders for the financial year 2022-23 (FY23) earlier this month and fixed Wednesday, 15th February 2023 as the Record Date for the same.

“The Board of Directors declared Interim Dividend of Rs 6 per Ordinary Share of Rs 1 each for the financial year ending on 31st March 2023,” ITC said in its results filing on February 3, 2023.

The company added that Interim Dividend will be paid between Friday, 3rd March, 2023, and Sunday, 5th March 2023 to those Members entitled thereto.

What is Record Date and why it’s important?

The determination of record date is required to ascertain who exactly a company's shareholders are as of that date since shareholders of an actively traded stock are continually changing.

The shareholders of record as of the record date will be entitled to receive the dividend or distribution, declared by the company.

Brokerage’s View

“We expect ITC to sustain its strong growth momentum across categories and the cigarettes business continues to deliver volume growth and market share gains in the absence of competition from illicit trade, with the recent tax hike unlikely to dent sales, Vikrant Kashyap of BoB Caps said in a report.

According to Kashyap, the FMCG segment too has outperformed some peers and expects margins to improve as input costs soften. The brokerage gives a ‘buy’ stance with a target price of Rs 459 apiece, implying a 23 per cent upside potential in the stock price from Monday’s closing.

ITC Q3 Earnings

ITC reported a 23.09 per cent increase in consolidated net profit at Rs 5,070.09 crore for the third quarter ended December 2022, helped by growth momentum across its operating segments. It had posted a net profit of Rs 4,118.80 crore in the same quarter a year ago period.

The diversified company’s revenue from operations was up 3.56 per cent to Rs 19,020.65 crore during the quarter under review, as against Rs 18,365.80 crore in the corresponding period of the previous fiscal.

ITC Share Price NSE

ITC shares in the last one year have gained more than 75 per cent as compared to nearly an eight per cent rise in the S&P BSE Sensex. Year-To-Date, the stock grew almost 16 per cent against a 0.32 per cent fall in the benchmark index during the same period.

In the previous six months, the counter has reported nearly 24 per cent growth versus around a 2 per cent surge in the Sensex.