ITC shares to turn ex-dividend today; dividend history, payment date, what to watch, targets

ITC Ltd, along with stocks such as Aptech Ltd, Page Industries Ltd and Chemcon Speciality Chemicals Ltd, will turn ex-dividend for their final dividend on Wednesday, May 27. Today also marks the record date for identifying eligible ITC shareholders entitled to receive the FY26 final dividend at a later date.

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The Kolkata-based FMCG giant, while reporting its March quarter results on May 21, announced a final dividend of Rs 8 per share, which will be paid on July 29. This dividend is in addition to an interim dividend per share (DPS) of Rs 6.50 that ITC announced earlier, taking its total dividend payout for the year to Rs 14.50 per share. This is marginally higher than the one it declared in the previous financial years. 

ITC dividend history
ITC’s dividend yield stood in the 3.2-5.9 per cent range since FY20. The cigarette maker announced a total dividend of Rs 14.35 per share for FY25, translating into a payout of Rs 8,133.11 crore. For FY24, ITC declared dividends worth Rs 7,799.45 crore, or Rs 13.75 per share. In FY23, the company announced a total dividend of Rs 15.50 per share, amounting to Rs 7,448.41 crore. Dividend payouts for FY22 and FY21 stood at Rs 6,469.48 crore and Rs 6,152.68 crore, respectively.

ITC shares: What to watch?
360 ONE Capital said a key monitorable remains price increases in the RSFT segment, as the company has taken price hikes in DSFT, now negating the tax change. "However, RSFT (45 per cent of overall volumes) remains a key segment where the incremental tax impact is still larger than the price hikes taken by the company. Cigarette volume outlook for Q1 is much weaker; however, price hike will give some cushion towards the profitability. We expect 2Q to be much better in terms of overall performance," it said.

Elara Securities noted that ITC's cigarette business witnessed a significant change in taxes in the quarter gone by. It said Q4 is not a true reflection of the volume impact due to price hikes, as net sales for cigarette business were close to 10 per cent, as per its calculation, due to strong volume offtake before the implementation of new taxes. "We believe, Q1FY27 should provide a clearer picture on the impact of price hikes on volumes. We reiterate Accumulate with SoTP-TP of Rs 335 (unchanged)," it said.   

Nuvama too believes the March quarter was a transition quarter for the cigarette industry as it does not expect the elevated profitability trend to sustain into Q1FY27. 

"Despite the challenging environment, ITC continued to scale up value-added agri products, nicotine derivatives and premium FMCG categories, strengthening medium-term growth visibility," the brokerage said.

ITC target prices
360 ONE Capital suggested a target of Rs 440 on ITC. Systematix Institutional Equities finds the stock worth Rs 340. "With significant upheaval in the core cigarettes business – on volumes, pricing, realizations and margins – expected to persist near-term at least, we remain on the sidelines here," it said.

Antique remained confident of ITC's long-term market leadership and maintained 'Buy' recommendation with a target of Rs 399 based on SoTP-based valuation on FY28 estimates. 

Nirmal Bang said ITC delivered resilient performance despite a challenging macroeconomic environment. 

ITC, it said, continued to respond with speed as well as agility and has taken several steps in the past couple of months to fortify its portfolio and sustain market standing. 

"We maintain our HOLD rating on the stock. We continue to value the company at a P/E multiple of 19 times FY28E EPS (compared with the 5-year average multiple of 23.5 times), resulting in a target of Rs 340 (Rs 305 earlier)," it said. 

Considering the recent tax hikes in the cigarette business along with inflationary pressures arising from geopolitical tensions, energy shocks, and supply-side disruptions, Axis Direct has revised lower its FY27 and FY28 estimates for ITC, but remained positive on medium to long-term growth. It suggested a target of Rs 325 on the stock against Rs 340 per share earlier.