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ITC glows on bonus hopes

Calcutta, May 27: ITC, the tobacco-to-hotels major, today announced a hefty dividend on the back of a good profit figure but the icing on the cake was the promise of a bonus issue along with a stock split.

The company has posted a 37.5 per cent rise in post-tax profit for the last financial year and declared a dividend of Rs 31 per share.

The ITC board will meet on June 17 to discuss the bonus issue, sub-division of share and an increase in the authorised share capital of the company.

While ITC officials are tightlipped, the market is expecting the company to offer one bonus share for every two held and a split in face value of the stock to Rs 2 from Rs 10 now.

This is the first time the company is contemplating a stock split, in keeping with a growing trend to make the scrip more affordable for investors. However, it is the sixth bonus that ITC is mulling, the last being in 1994 when it offered one share for each held.

The news propped up the stock to a 52-week high today to touch Rs 1,614.70 on the National Stock Exchange (NSE). Later, profit booking dragged it down to close at Rs 1,570.70.

The ITC scrip has had a fantastic run in recent times. In the last two months, it steadily rose from Rs 1,300, backed by some good news on the excise litigation front.

After a protracted legal battle, the Centre dropped the Rs 453-crore tax claim on ITC, while the company agreed not to claim the Rs 350 crore it had already deposited with the government.

In 2004-05, ITC’s gross turnover grew 12.8 per cent to Rs 13,585.39 crore compared with Rs 12,039.92 crore in the year-ago period. Net sales turnover grew 17.6 per cent to Rs 7,875.26 crore from Rs 6,695.32 crore.

Net profit (before exceptional items) grew 15.3 per cent to Rs 1,837 crore over Rs 1592.85 crore in the previous year.

With the exceptional item of Rs 354 crore, profit after tax went up to Rs 2,191.4.crore compared with Rs 1,592.8 crore in 2003-04. Earning per share also increased from Rs 64.34 to Rs 73.74.

For the fourth quarter, ITC has posted a profit after tax of Rs 771.7 crore compared with Rs 387 crore in the corresponding previous quarter. Total income stood at Rs 2,236.4 crore compared with Rs 1,938.1 crore.

ITC’s hotels business has done quite well. Profit grew almost four-fold to Rs 140.94 crore. During the year the company merged ITC Hotels and Ansal Hotels with itself.

The company’s mainstay, the cigarettes business, grew 8.4 per cent, while the non-cigarettes business grew 29.5 per cent. The non-cigarettes business now contributes 42 per cent of the net turnover.

However, the non-cigarette FMCG business, which includes garments, greetings, gifts, stationery and packaged foods, continued to suffer a loss.

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