Meme favourite ITC is the darling of retail investors too

Memes about ITC are not new for any stock market investor or participant. Social media platforms like WhatsApp, Twitter and Facebook are full of memes showing how ITC has remained at the same level for years, even as other stocks and the benchmark indices scaled new highs with ease quite frequently.

Check out some of the memes:

While such memes ignore the company’s high dividend yield -- the percentage of the share price paid in dividends each year -- when compared to its sector peers, it seems the vast retail investor community has also ignored the memes and made the stock one of its favourites.

Data from primeinfobase.com shows that between the March and June quarter this year, ITC saw the highest amount of buying by retail investors wherein a total of 13.48 crore shares of the FMCG entity worth Rs 2,805 crore were bought.

The huge buying was witnessed even as the share price fell over 7 per cent during that period. Interestingly, in the list of top 10 companies that saw the highest quantum of buying by retail investors between the March and June quarter, ITC was the only entity that saw a significant drop in share price.

If one goes by the yearly closing price of the FMCG entity for the past few years, it would indeed emerge as the stock has been a huge underperformer when compared to the Sensex returns. Last year, ITC shares fell a little over 12 per cent even as the Sensex gained nearly 16 per cent. In 2019 as well, ITC lost 15.62 per cent when Sensex moved up 14.38 per cent.

Also read: Payoff Time for ITC

In the last 11 years, ITC has fared poorly when compared to the Sensex on eight occasions, including the current year to date.

However, the dividend yield of ITC is better when compared to its peers. As per data from Trendlyne, the two-year dividend yield of ITC is 4.9 per cent, while the same for Hindustan Unilever (HUL) is 1.2 per cent. For the five-year period, the dividend yield of ITC and HUL is pegged at 3.4 per cent and 0.9 per cent, respectively.
Incidentally, ITC is on the buy list of many broking firms, including the global majors. Earlier this week, CLSA recommended a ‘buy’ on ITC with a 12-month price target of Rs 265 -- an upside of nearly 25 per cent over its
the current market price of Rs 212.70.

ITC also features among the top 10 listed companies with the highest retail holding in value terms. At the end of the June quarter, the cumulative value of retail holding in the company was pegged at Rs 31,388.27 crore.
Meanwhile, ITC is followed by BPCL that saw shares worth Rs 2,259 crore being bought between the March and June quarter – a period when the share price of the downstream oil company gained 9.38 per cent.

Some of the other notable companies that saw huge retail buying during the same period were Adani Ports & Special Economic Zone, HDFC Bank, Infosys, Godrej Consumer Products, and HDFC.

Also read: ITC’s Tech Enthusiast