Shares of ITC hit their new all-time high on Friday on the back of a sustained rally post-March quarter earnings report. The market capitalisation of the cigarette-to-hotel conglomerate crossed ₹5.5 lakh crore for the first time amid a continued rise in the share price for the last six straight sessions. The stock has risen nearly 6% in the past six trading days.

On Friday, ITC shares opened marginally higher at ₹443 against the previous closing price of ₹441.1 on the BSE. During the session so far, the FMCG heavyweight rose as much as 0.6% to touch a new record high of ₹443.85, with the 1.45 lakh shares changing hands over the counter compared with a two-week average volume of 4.45 lakh scrips.

The counter has surged 72% in the last eleven months from its 52-week low of ₹258.05 touched on June 17, 2022. The FMCG major has rallied 66% in the past 12 months; 30% in six months; and 7.5% in a month.

On May 18, ITC released its March quarter earnings, which saw its consolidated net profit rising by 23% year-on-year to ₹5,175 crore as compared to ₹4,195 crore in Q4FY22. The revenue from operations grew 5% year-on-year to ₹19,058 crore as against ₹17,754 crore in the corresponding period last year.

Segment wise, revenue from ITC’s cigarettes business rose 13% year-on-year to ₹8,082 crore for the March quarter as compared with ₹7,177 crore in the same period last year. The revenue from agriculture business declined to ₹3,607 crore in the fourth quarter from ₹4,375 crore in the corresponding period last year. The revenue from the hotel business almost doubled to ₹808.72 crore in Q4FY23 as against ₹407.42 crore in the year-ago quarter.

The ITC board also recommended a final dividend of ₹6.75 and special dividend of ₹2.75 per equity share for FY23. Together with the interim dividend of ₹6 per share paid in February this year, the total dividend for FY23 stood at ₹15.50. At the current share price, the dividend yield stands at 1.35%.

Post Q4 results, JM Financial maintained “Buy” rating on ITC shares with a target price of ₹475 against previous estimates of ₹440 apiece. “ITC’s March quarter earnings continued to be strong with a very impressive delivery in FMCG on both growth and profitability fronts. Cigarettes performance was mostly on expected lines, with volumes continuing to grow in double-digit, helped also by continued clawback from the illicit trade. A very strong growth in FMCG (resumption of education institutions helped) and continued buoyancy in hotels led to a >60% growth in non-cigarettes EBIT, notwithstanding the weaker-than-expected performance in paperboards,” it said.

Prabhudas Lilladher has given “Accumulate” rating with a revised price target of ₹455. “While near term outlook is strong, we estimate 10.7% EPS CAGR over FY23-25. ITC has scope to increase cigarette profitability as current EBIDTA margins are 5ppt lower than peak margins.  ITC trades at 22.8x FY25 EPS with ROE/ROCE of 30%+/35%+ and 80%+ dividend payout. Retain Accumulate,” it said in a report.

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