What drove ITC to an all-time high

Seems like ITC has finally decided to shed its infamous tag of being stagnant. The company hit a new all-time high in 2022 and outperformed BSE Sensex. It also raced ahead of the BSE FMCG index in 2022.

And in a repeat of last year, ITC touched a new all-time high on June 19, 2023. As of June 23, 2023, the company has returned its investors a whopping 65 per cent.

So, let's explore what led to this surge after years of stagnation.

Robust performance in FY23

In FY23, each segment of the company reported its highest revenue and operating profit of the last five years.

Here are the factors that fueled this growth.

• Tax stability, product innovation and the company's efforts to curb illicit trade boosted the cigarette segment .
• A surge in demand supported, coupled with better distribution reach via a multi-channel distribution system, benefitted the FMCG segment .
• Revenue from the hotel segment more than doubled on the back of more weddings and leisure travel.

Demerger talks

Investors have always held the opinion that the hotel segment has been a drag on the company's overall performance far too many times. In an interview, ITC's Chairman and MD Sanjiv Puri remarked that the company is considering a demerger of its hotel business. This made market participants optimistic and drove the share price up.

Doling out dividends

While the company is known for its regular dividends, FY23's payout was every dividend investor's dream. It gave a dividend of Rs 15.5 per share, a 35 per cent jump over the last year's dividend.

While only time will tell if ITC will be able to keep its momentum alive, its present performance is indeed hinting at better times ahead.

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