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Thread on ITC
ITC is one great case study in FMCG sector.
It gave great returns in past, however poor returns in last 5 years.
A great quality company may not be a good stock always. Can it be a good investment from hereon, here are my thoughts & please research further
ITC is one great case study in FMCG sector.
It gave great returns in past, however poor returns in last 5 years.
A great quality company may not be a good stock always. Can it be a good investment from hereon, here are my thoughts & please research further
Few of ITC brands
~ Aashirvaad
~ Sunfeast
~ Bingo
~ Kitchens of India
~ Yippee
~ B Natural
~ Mint O
~ Candyman
~ Fabelle
~ ITC Master Chef
~ Farmland
~ Essenza Di wills
~ Flama
~ Vivel
~ Savlon
~ Classmate
~ Homelite
~ Paperkraft
~ Gold Flake
~ Navy Cut
~ ITC Maurya
~ e-Choupal
~ Aashirvaad
~ Sunfeast
~ Bingo
~ Kitchens of India
~ Yippee
~ B Natural
~ Mint O
~ Candyman
~ Fabelle
~ ITC Master Chef
~ Farmland
~ Essenza Di wills
~ Flama
~ Vivel
~ Savlon
~ Classmate
~ Homelite
~ Paperkraft
~ Gold Flake
~ Navy Cut
~ ITC Maurya
~ e-Choupal
Multiple businesses under ITC umbrella & respective approximate % revenue as per FY20 data
1. Cigarette 41%
2. FMCG (non tobacco) 24%
3. Hotels 3%
4. Agri 20%
5. Paper, Paperboards, Packaging 10%
6. Others 2%
1. Cigarette 41%
2. FMCG (non tobacco) 24%
3. Hotels 3%
4. Agri 20%
5. Paper, Paperboards, Packaging 10%
6. Others 2%
In my valuations framework, I would give the following price earnings multiple in terms of matured valuation during good times.
Business P/E
1. Cigarette 20
2. FMCG (non tobacco) 80
3. Hotels 30
4. Agri 20
5. Paper, Paperboards, Packaging 10
Business P/E
1. Cigarette 20
2. FMCG (non tobacco) 80
3. Hotels 30
4. Agri 20
5. Paper, Paperboards, Packaging 10
ITC is trying to diversify from sin (tobacco) sector to proper FMCG company.
Every other business it is into, commands a comparative low valuations multiple & is capital intensive.
With FMCG growth, ITC stock will rerate.
Every other business it is into, commands a comparative low valuations multiple & is capital intensive.
With FMCG growth, ITC stock will rerate.
One negative point is there is no real promoter or ownership at the moment.
Shareholding structure
1. Institutions (funds) ~58%
2. Corporate Bodies ~ 30%
In addition, equity is extremely huge.
This is a worth point to keep in mind from valuations perspective.
Shareholding structure
1. Institutions (funds) ~58%
2. Corporate Bodies ~ 30%
In addition, equity is extremely huge.
This is a worth point to keep in mind from valuations perspective.
Company has good dividend policy which it has recently updated. It is intending to have dividend payout ratio as 80% to 85% of the PAT
This will result in good dividend yield & better than many fixed deposits
Though I don't believe in dividend yield stocks but this is different
This will result in good dividend yield & better than many fixed deposits
Though I don't believe in dividend yield stocks but this is different
Key challenges with ITC
~ Maintaining sustainability & growth in cigarette business
~ FMCG business yet to perform to the level from where growth can be better predicted
~ Intense competition
~ Maintaining sustainability & growth in cigarette business
~ FMCG business yet to perform to the level from where growth can be better predicted
~ Intense competition
Potential triggers in future for ITC
~ May demerge businesses to focus better
~ Non cigarette FMCG revenue may show good growth with bigger brand value
~ Hotel business has good potential in very long term because of luxury aspect
~ Agri business has good potential
~ May demerge businesses to focus better
~ Non cigarette FMCG revenue may show good growth with bigger brand value
~ Hotel business has good potential in very long term because of luxury aspect
~ Agri business has good potential
ITC earnings Sep 2020 - my important points
~ FMCG (non cigarette) revenue
~ FMCG (non cigarette) margins
~ Visible aggression in new product launches, brand building
Sustainability & growth matters over next few quarters.
A must read presentation
https://bseindia.com/xml-data/corpfiling/AttachLive/1c378d93-a1bd-4728-b6e1-5c876a6c8b4e.pdf
~ FMCG (non cigarette) revenue
~ FMCG (non cigarette) margins
~ Visible aggression in new product launches, brand building
Sustainability & growth matters over next few quarters.
A must read presentation
https://bseindia.com/xml-data/corpfiling/AttachLive/1c378d93-a1bd-4728-b6e1-5c876a6c8b4e.pdf
At current levels, ITC is bound to attract significant investor attention.
I am expecting non cigarette FMCG revenue to contribute 35% of total revenue which will take the overall price earnings multiple towards 30+ sooner than later.
I am expecting non cigarette FMCG revenue to contribute 35% of total revenue which will take the overall price earnings multiple towards 30+ sooner than later.
My target price on ITC is
~ 500+ by Dec 2021
~ 800+ by Dec 2022
~ 1000+ by Dec 2023
In long run, it has potential to command higher valuations than even HUL & Nestle.
~ 500+ by Dec 2021
~ 800+ by Dec 2022
~ 1000+ by Dec 2023
In long run, it has potential to command higher valuations than even HUL & Nestle.
Looking at the under valuations & future potential to rerate, it has scope to give great returns in sync with business performance & triggers.
It can be a good largecap portfolio stock from must consumption sector.
Research & decide....
A FMCG multibagger in making.
It can be a good largecap portfolio stock from must consumption sector.
Research & decide....
A FMCG multibagger in making.
Save this thread and review in Dec 2021.
ITC Thread
FMCG stories don't come up so easily. And when real FMCG story comes with facts, it will be chased harder than one can even imagine.
ITC Thread
FMCG stories don't come up so easily. And when real FMCG story comes with facts, it will be chased harder than one can even imagine.
