@investor12321
Appreciate your effrorts to highlight key negatives in ITC along with positive. Most of factors mentioned are valid, I have different view point about Non-Cigarette business of the company. In my view, over a period of time, ITC management has been able to achieve the right direction, although pace may not be what an average investors expecting.
Find enlcosed two graphs which were covered by analyst report in 2021-22 on ITC. The first image provide details of ITC FMCG business growth in sales and margin over the year . The second image provide marketing spent of ITC in a partcular segement vis other peers.
Image 1
Image 2
As per analyst calculation in image 1, ITC managed to increase EBITDA margin from -2% in FY12 to 8.9% in FY21 and ROCE from -10.1% in FY12 to 10.8% in FY21. This are actual performance, which does give confidence to about right direction of ITC management on FMCG business.
In second image, If one take example of a product Bingo, it suggest that over a period of time, aggressive marketing expenditure for building brand, get stabilise once Sales reaches to critical mass, as reflected by media spent as per cent of Sales declining from estimate 10.4% in FY14 to 6.6% in FY19, almost 400 bps increase just from market spent saving. This information is not available in public domain and may not be accurate. However, at least it does provide direction margin of ITC FMCG business over long term.
Disclosure: ITC among top 2 holding in my equity portfolio. My view may be biased due to my holding. Not suggesting any investment action. Not a SEBI registered advisor
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