ITC Share Price

ITC Ltd. fundamental analysis

ITC Limited, originally founded as the Imperial Tobacco Company of India in 1910, is a prominent Indian conglomerate with a diversified presence across industries such as FMCG, hotels, paperboards, agribusiness, and information technology.

The company, headquartered in Kolkata, began its journey in a small office on Radha Bazar Lane and has grown into a symbol of business diversity and transformation in India​.

Over the decades, ITC has expanded from its tobacco roots into various sectors. Notably, in 1925, ITC ventured into the packaging and printing business, which supports its cigarette business and has grown to become India's most sophisticated packaging house. Over the years, it has diversified its operations and now has a presence across six business segments, namely FMCG, hotels, agribusiness, information technology, paper products, and packaging.

Investors often track ITC share price closely, hoping to gauge its performance and potential returns. Currently, discussions around ITC share price target are prevalent among market analysts and investors alike, reflecting expectations for future growth and profitability.

This article focuses on the business model and industry fundamentals of ITC Limited to establish whether or not this would be a good investment for you.

ITC Limited

ITC Limited is a Kolkata-based Indian business conglomerate corporation. It was first known as “Imperial Tobacco Company of India Limited” and was established on August 24, 1910, as a British–owned company registered in Kolkata.

The 1970s marked ITC's entry into the hospitality industry, starting with the acquisition of a hotel in Chennai, now part of a large network of over 115 properties under several brand names​. ITC's commitment to innovation and market expansion is also evident in its foray into new business areas like the food sector in 2001 and personal care in 2005, where it introduced various widely recognised brands. However, tobacco generates a substantial proportion of its income.

In terms of market capitalisation ITC is the second largest FMCG company in India and the third-largest tobacco company globally. The organisation employs more than 33,000 people across India in over 60 locations while its products are present in over 6 million retail outlets within India and exported to 100 countries worldwide.

In addition to its traditional operations, ITC has made significant strides in sustainability and social responsibility. The company has been involved in various initiatives, including renewable energy, responsible luxury, and extensive corporate social responsibility programs focusing on education, environmental protection, and community development​​.

Is the FMCG sector a goldmine investment?

The Fast-Moving Consumer Goods (FMCG) sector in India has significantly benefited from the country’s market policies and investment boom. India is on track to become the world’s third-largest economy by 2027, surpassing Japan and Germany, and have the third-largest stock market by 2030. This growth is driven by global trends and key investments the country has made in technology and energy.

The Indian economy is expected to grow by approximately 8% in the next 5-6 years, endorsed by increasing public investment in infrastructure and a pickup in private sector investment.

As for ITC Limited, it’s a good choice for investment. It has a presence in six business sectors:

• FMCG
• Hotels
• Agribusinesses
• Information Technology
• Paper Products
• Packaging

Therefore, investing in ITC Limited could be a profitable decision considering its strong financial performance and growth prospects. The current ITC share price is Rs. 419.60, and the future looks promising with a positive ITC share price forecast of Rs. 742 to Rs. 771.59 by 2025.

Who are ITC Limited’s competitors in the FMCG sector?

In the conglomerate sector, ITC Limited faces competition from various companies. Some of the key competitors include:

• HUL (Hindustan Unilever)
• Dabur
• Nestle
• Parle
• Britannia

History of ITC Limited

Here’s a brief overview of ITC Limited’s history:

• Incorporation: ITC Limited was established on August 24, 1910, as the Imperial Tobacco Company of India Limited. It was renamed India Tobacco Company Limited in 1970, then to I.T.C. Limited in 1974, and finally to ITC Limited in 2001.
• Product range: ITC’s product range spans across various segments including Fast Moving Consumer Goods (FMCG) like foods, personal care, cigarettes, and cigars, education & stationery products, incense sticks, and safety matches; Hotels, Paperboards and Packaging, Agri Business, and Information Technology.
• Infrastructure: ITC has a diverse business portfolio with a presence in manufacturing, services, and agri-business. It has made strategic investments in infrastructure and digitalisation, including tech-enabled digital infrastructure with AI/ML-enabled apps and D2C platforms.
• Certifications: ITC’s businesses hold various certifications such as ISO 14001 for Environment Management Systems, OHSAS 18001 for Occupational Health & Safety Management Systems, and SA 8000 for Social Accountability. Its food safety management systems and hotels have also received ISO 22000/HACCP certifications.
• Awards and recognition: ITC has received numerous awards, including the Best CEO Award by Business Today, Transformational Leader Award by Asian Centre for Corporate Governance and Sustainability, and recognition for its hotels and packaging designs at various platforms.

Company profile of ITC Limited

Pros:

• Almost debt-free: ITC Limited has managed to operate with minimal debt, which is a strong indicator of financial health and stability. This financial stability could positively impact the ITC share price target. A company with minimal debt is less risky for investors, which can lead to increased investor confidence and a higher share price.
• Financial performance: ITC’s Q4 FY24 results show a gross revenue rise by 2.0% YoY to ₹17,572 Cr, and a net revenue increase by 1.4% to ₹16,371 Cr.
• Good ROE track record: The company has a good return on equity (ROE), with a 3-year average of 27.5%, suggesting efficient management and profitable business operations.
• Healthy dividend payout: ITC has been maintaining a healthy dividend payout ratio of 92.4%, which is attractive to investors looking for regular income.

Cons:

• High price to book value: The stock is trading at 7.14 times its book value, which might suggest that it’s overvalued compared to its actual net asset value.
• Moderate sales Growth: Over the past five years, the company has delivered a moderate sales growth of 7.96%, indicating potential challenges in business expansion or market competition. This could impact the ITC share price forecast, which suggests a potential upside of 20.53% from the last price of 419.60.
• Increased working capital days: The working capital days have increased from 51.9 to 104 days, which could imply inefficiencies in managing inventory and receivables.

The Finances and ITC share price forecast

Here’s a summary of ITC Limited’s financial information as of May 2024:

The ITC share price today is Rs. 420+. The ITC share price forecast suggests that it could increase to ₹528.83 in the next year, and potentially reach Rs. 923.40 in the next 5 years, and Rs. 1,449.33 in the next 10 years.

Shareholding pattern of ITC Ltd.

The shareholding pattern of a company like ITC Limited can significantly influence the ITC share price chart. This is because the distribution of shares among different types of investors can affect the supply and demand dynamics for the stock, which in turn can drive price movements.

As per the latest data, the shareholding pattern of ITC Limited is as follows:

• Promoters: Hold 0%
• Foreign institutional investors (FII): 41.0%
• Domestic institutional investors (DII): 43.8%
• Public: 15.2%

Peer multiple comparison

ITC Limited operates in a highly competitive market, especially in the FMCG and hospitality sectors. So, when comparing ITC share price to its peers, you must also compare the following metrics. Here are some of the key competitors and their respective financial metrics: