Shares of ITC fell 2% to Rs 411.5 on the BSE in intraday trade on Friday, so it was down 4% on profit registration over the past two sessions after the company reported a better-than-expected 23.35% yr-3 Consolidated net profit for the quarter (Q4FY23) rose YoY to Rs 5,175 crore, up from Rs 4,196 crore in the corresponding quarter of the previous fiscal year (Q4FY22), mainly driven by growth in cigarettes, FMCG (non-cigarettes) and hotel business segments.

With the drop in the past two days, the market price of ITC has fallen 4.4% from its all-time high of Rs 433.45 touched on May 8, 2023. The stock has soared to outperform the market by 25% so far in 2023, while the S&P BSE Sensex gained 0.55%.

Meanwhile, the ITC board has recommended a special dividend of Rs 2.75 per share in addition to the final dividend of Rs 6.75 per share for the financial year ending March 31, 2023.

Consolidated operating income rose 7.34% to Rs 19,058.29 crore in Q4FY23, beating the Bloomberg consensus estimate of Rs 16,856 crore. Adjusted net income is estimated at Rs 4,819 crore.

The company’s performance was helped by a focus on hotel premiumisation, cost optimization and asset rights strategies. The cigarette segment recorded revenue of Rs 8,082 crore in Q4FY23 compared to Rs 7,177 crore a year earlier, with the legal trade recovering from the shock of the pandemic.

Operating profit rose 18.9% to Rs 6,209 crore and operating margin expanded 385 basis points to 36.1%. Strong cigarette volume growth, softer commodity prices and lower contribution from the agricultural trading business led to an expansion of both gross and operating margins in the quarter.

Motilal Oswal Financial Services maintained its “buy” call on the stock with a target price of Rs 485 per share.