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As more and more investors and funds focus on sustainable business model, experts attribute ITC’s high exposure to ciggerate business a key reason for stagnant performance of its share price. “Its hotel business is capital intensive and has seen bad times lately because of the pandemic.
While its FMCG peers have a profit margin of 15-20\%, ITC’s margin is a mere 2\% only! The simple reason behind this is that ITC’s FMCG brands are relatively much younger. While the likes of Britannia have been in business since Gandhiji’s times, ITC forayed into FMCG much much later, only in the 2000s.
Why ITC share price is not rising?
The simple reason behind this is that ITC’s FMCG brands are relatively much younger. While the likes of Britannia have been in business since Gandhiji’s times, ITC forayed into FMCG much much later, only in the 2000s. All in all, ITC is still a Cigarette company trying its hand in the FMCG sector!
Why is ITC stock price so low?
ITC’s cigarette business, which accounts for roughly 85\% of its earnings before interest and taxes in FY20 (EBIT) has been hit hard by ESG concerns in recent years, resulting in a drop in price-to-earnings multiples.
What is the future growth rate of ITC FMCG business?
The FMCG business is estimated to grow at 11 CAGR till fiscal year 2023. In financial year 2008, the revenue breakdown of ITC’s FMCG revenue saw staples take 29\% of the pie, lifestyle having 27\% share and biscuits having 24\% stake, among other products.
Is ITC’s FMCG segment set to become a major value driver?
CLSA in its report said that ITC’s FMCG segment is set to become a major value driver, with the company’s legacy cigarette business providing the cash to meet its ambitious goals. CLSA has a target price of Rs 220 on the scrip which translates to a 27\% upside from current price of Rs 173 per share.
Is ITC Ltd a good stock to buy?
Past 10 year’s financial track record indicates that ITC Ltd is a good quality company. However, for specific investment actions please connect with your investment advisor. 2. Is current market price of ITC Ltd a good price to buy it?
How did ITC’s profits decline in Q1 FY21?
Profit before Tax (PBT) also declined by 35\% YoY and 30.7\% QoQ in Q1 FY21. Since, the company is virtually debt-free, there is no interest payment cost incurred. In line with the decline in Operating Profit and PBT, the Net Profit of ITC also declined by almost 11.6\% YoY to Rs.3,663 Cr from Rs.4,142 Cr in Q3 FY20.