FMCG giant, ITC Ltd's share price will be in focus as the company received CCI approval for its demerger of ITC Hotels businessUdabur Investment. The demerger of the 10:1 ratio will lead to shareholders holding a 60% stake directly in ITC Hotels. This also comes ahead of ITC's record date for 750% final dividend payout for FY24. Brokerage Nirmal Bang has given a buy recommendation for a target price of Rs 520 on expectations of healthy medium-term earnings growth in ITC.

ITC's share price stood at Rs 430.80 apiece, with a market cap of Rs 5,37,841.80 crore. The stock has been resisting around Rs 433 to Rs 443 levels, while its support levels range from Rs 415 to Rs 430. The pivot point of ITC is currently around Rs 430.

ITC stock's 52-week high and low are at Rs 499.60 and Rs 399.30 apiece respectively. YTD, the stock is down by 8%.

ITC informed that the Competition Commission of India (CCI) has approved the proposed combination relating to the demerger of the Demerged Undertaking comprising the Hotels Business of ITC Limited into ITC Hotels Limited on a going concern basis.

ITC is demerging its hotels business in the ratio of 10:1. Giving a demerger update, ITC said, " Post obtaining no-objection from stock exchanges, Scheme of Arrangement for demerger ('the Scheme') was filed with National Company Law Tribunal (NCLT). NCLT has directed convening a meeting of shareholders of ITC on June 6, 2024, to consider and approve the Scheme."

The split-up of the hotel business from ITC will be in the ratio of 10:1. Meaning, for every (Ten) Ordinary Shares of the face and paid-up value of Re. 1 each held in ITC, 1 (One) equity share of the face and paid-up value of Re. 1 in ITC Hotels

After the completion of the demerger, the shareholders of ITC will directly hold about 60% of ITC Hotels, proportionate to their shareholding in ITC. The balance stake of about 40% will be held by ITC.

Apart from demerger development, ITC is also in focus for its Final Dividend of 7.50 per Ordinary Share of 1/- each for the financial year ending 31st March 2024.

The record date is fixed on June 4, 2024, for the same. ITC informed that the final dividend will be paid between Monday, 29th July 2024 and Wednesday, 31st July 2024 to those Members entitled thereto

This is together with the Interim Dividend of 6.25 per Ordinary Share declared by the Board on 29th January 2024. That being said, the total Dividend by ITC is Rs 13. 75 per Ordinary Share for FY24.

The total cash outflow on account of the Dividend (including the Interim Dividend of Rs 7,799.45 crores paid in February 2024) will be Rs 17,162.99 crores.

Brokerage Nirmal Bang said, "ITC's 4QFY24 results were slightly below expectations on all fronts, led by lower-than-expected revenue in Cigarettes, Agri and Paper Board businesses."

Further, Nirmal Bang reckons that EPS growth in FY25 could be in the mid-single digits if Cigarette volume and EBIT growth remain relatively muted in the near term even as they are expected to recover subsequently.

On the valuation, Nirmal Bang said, "A combination of less punitive Cigarette GST regime, healthy growth in Other FMCG sales & margins and revival in Hotels business has meant that ITC's topline and EBITDA have clocked 9-10% CAGR over the last four years compared to mid-single digit growth garnered in the preceding five years."

It added, "We expect EBITDA/EPS to grow at ~11%/9% CAGR over FY24-FY26E. Valuation is inexpensive at ~23x FY26E EPS. Given the likely healthy earnings growth considering its size and impressive return ratios of over 30%, we have maintained BUY on ITC with a TP of Rs520 (based on 27x FY26E EPS). Both target multiple as well as TP are unchanged vs our previous note, but we have rolled forward from Dec'25E EPS to March'26E EPS."

The consolidated net profit of ITC stood at Rs 5,190.71 crore in Q4FY24, declining from Rs 5,406.52 crore in Q4FY23, and Rs 5,242.58 crore in Q3FY24New Delhi Stock Exchange. Consolidated revenue from operations was at Rs 19,446.49 crore, down from Rs 19,484.50 crore in Q4FY23, but marginally up from Rs 19,058.29 crore in Q3FY24.