Shares of ITC traded up 2% to Rs 267.25 on BSE during Friday’s intraday trading in an otherwise weak market. This increase is explained by good earnings expectations thanks to the improvement in cigarette volumes and the announcement of a dividend. By comparison, at 10:22 a.m., the S&P BSE Sensex was down 1.8% at 54,695 points.
“A meeting of the company’s board of directors has been convened for May 18, 2022, to review the audited financial results for the three months ended March 31, 2022. The board will also consider the final dividend recommendation for the year aforementioned financial,” the company said in an exchange filing.
Previously, ITC paid an interim dividend of Rs 5.25 per share of Re 1 each for the financial year 2021-22.
The share price of Fast Moving Consumer Goods (FMCG) Cigarettes has traded near its 52-week high of Rs 273.10 which it touched on April 11, 2022. Over the past month , the stock gained 2%. , against an 8% drop in the S&P BSE Sensex. Meanwhile, over the past three months, the stock is up 13%, versus a 7% decline in the benchmark. The title also jumped 17% in six months, against a 9% drop for the Sensex.
While announcing third quarter results on February 3, 2022, ITC remained optimistic about a robust recovery in all markets, helped by increased mobility, agile supply chain and market services .
Analysts at Elara Capital believe that the cigarette category continues to see increased volume due to increased mobility and improved farm income during the Rabi season. “A better likely achievement during the Kharif season could also lead to increased farm incomes, leading to improved rural growth,” the brokerage firm added.
Meanwhile, Emkay Global Financial Services believes ITC is better positioned than its peers with improving cigarette performance and strong earnings visibility. “We expect ITC to post a relatively stronger quarter, with improved cigarettes and other divisions and less pressure on margins compared to its FMCG peers,” the brokerage added.
Analysts also estimate stable cigarette performance with sales/EBIT growth of 9%/10% and FMCG sales growth of 9% with flat margins year-on-year. “We expect strong performance in Paper and Agriculture with EBIT growth of 11%/38% and breakeven EBIT for Hospitality. After-tax profit growth is less than 8% due to lower other income and higher EIR,” Emkay Global Financial Services analysts said.