Dividend paying stock delivers 56% in one year; Analysts see more upside of 21% 

The tobacco giant ITC has been one of the most loved stocks by Indian investors lately. In the last 12 months, the stock of cigarettes to flour maker has surged a whopping 56%. While during the same period, the benchmark NIFTY 50 index trades almost flat at the present 16,930 level. 

Headquartered in Kolkata, ITC Ltd. is a large-cap company with a market value of Rs 4,70,000 crore. It has a diversified presence in multiple sectors such as tobacco products, kitchen staples, FMCG, hospitality, paper, IT services, and more. It has a strong portfolio of brands including Aashirvaad, Classmate, Engage, Sunfeast, and Gold Flake. 

In addition to generating capital gains, ITC is also a dividend stock. As of 13:20 IST, the shares of this blue-chip stock were trading at Rs 379 apiece. At the current price point, the dividend yield of the stock is 3.04%. In the last two financial years, FY22 and FY21, the dividend payout ratio of ITC has been 93% and 101% respectively. 

Talking about the quarter results, for the three-month period ending December 2022, it reported consolidated sales of Rs 17,705 crore, an increase of 3.5% from Rs 17,108 crore during the same period last year. Its net profit grew at a much sharper rate, up by 23% to Rs 5,080 crore. 

Over the last five years, the management, led by Mr Sanjay Puri has put in consistent efforts to diversify the company away from its tobacco business. ITC’s tobacco segment brings more than 40% of the total revenue for the company. The balance comes from other divisions such as FMCG, paper, and hotels. 

Despite the recent rally, the brokerages are optimistic about the future prospects. Multiple firms have provided price targets for the stock. 

Among them, the analysts at the domestic brokerage firm Axis Securities have put a ‘buy’ rating on the stock with a target price of Rs 460. This translates to an impressive 21% upside for the investors. 

Written by Vikalp Mishra 

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