Shares of ITC rose 3% to Rs 384.55 on the BSE in intraday trade on Tuesday, ahead of the record date for an interim dividend of Rs 6 per share. In a meeting on February 3, the tobacco-to-hotels specialist’s board recommended an interim dividend of Rs 6 per share for the financial year ending March 31, 2023 (from Rs 5.25 per share in the previous year).

The company has set Wednesday, February 15, 2023, as the record date for determining shareholders’ entitlement to the interim dividend. ITC will be interim dividend ex-dividend tomorrow.

Meanwhile, significant stocks of diversified fast-moving consumer goods (FMCG) were trading near an all-time high of Rs 388.20, hitting a healthy outlook on February 6. Brokerage firms have increased valuation multiples for cigarettes as tax revenues and demand for cigarettes have stabilised.

The stock has risen 17% over the past month, with a gain of less than 1% for the S&P BSE Sensex. Brokers believe the cigarette tax hike proposed in the Union Budget 2023 is modest and could quickly be passed through a slight price increase.

The economic activity gathered momentum, and commodity inflation continued to moderate, even as core inflation remained elevated, the ITC said. However, they said rural demand remained relatively subdued but improved quarter-on-quarter.

“Stable volumes of cigarette taxes, backed by deterrent actions by law enforcement agencies, continue to enable the legal cigarette industry to recover volumes from illicit trade, leading to higher demand for Indian tobacco,” management added.

ITC is also benefiting from solid growth in the hotel, paperboard and FMCG businesses, with significantly higher margins due to high hotel occupancy, higher paperboard price growth, and operating leverage in the FMCG business. Analysts maintain their BUY recommendation with a target price of Rs 450 per share from Rs 405 per share previously.