Here’s an update to my earlier SOTP valuation of ITC.
A few important points to note:
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I expect that the biggest point of difference that most people would have with the valuation would be regarding the multiple chosen for the FMCG business. I believe the number I’ve used is fair for the reasons mentioned above. But if somebody were to ascribe 6x instead of 5x to it, I wouldn’t crib. Considering this, you may consider the fair price as per this SOTP to vary in the range of 340-360.
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This is a purely theoretical exercise done by me to satisfy my intellectual curiosity. Neither is this a recommendation to buy/sell and nor does this determine exactly my buy or sell thesis. I may choose to sell basis long term median valuation numbers or technical indicators and yet find doing this exercise useful, as it helps me get a sense of the ground beneath the lofty heights that markets can sometimes take stocks to.
Special thanks to @harsh.beria93 for giving his feedback and helping me fine tune the numbers. Would appreciate any feedback/views from fellow members.
Disc: Invested and biased.
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