ITC Approves Higher Dividend Payout For 2019-20, Shares Surge
ITC Ltd. on Thursday said it will offer higher dividend payouts for the ongoing financial year compared to the previous three fiscals.
India’s largest cigarette manufacturer, in a statement on its website, said its dividend payout policy from FY20 over the next few fiscal years is expected to be 80-85 percent of its net profit—higher than the nearly 69 percent average over last three years.
ITC shares rose as much as 8.53 percent intraday before paring some of the gains to close 7.40 percent higher at Rs 161.85 apiece on the National Stock Exchange. In comparison, benchmark Nifty 50 fell 2.42 percent to end the day at 8,263.45 points.
Bloomberg consensus projected earnings per share for the ongoing fiscal stands at Rs 12.5 apiece. At 80-85 percent of profit, dividend per share comes to Rs 10-10.6 apiece. This means a dividend yield of 6.6-7 percent at current market price, according to BloombergQuint’s calculations.
Macquarie which has an ‘outperform’ rating on ITC said the fast moving consumer goods maker can support a higher dividend payout ratio as it has a strong balance sheet and lower capital expenditure requirements compared to FY19.
The brokerage said ITC’s dividend yield is now in line with global tobacco players Philip Morris International Inc., British American Tobacco Plc and Japan Tobacco Inc.
Macquarie has a price target of Rs 304 on ITC, based on sum-of-parts valuations.