ITC: “Will”(s) “Gold Flake” assist “Ashirwad” to win “Bingo!”?

The Valuation of ITC is at its peak.

As we can see from the below image, the PE is reaching the top it made in 2023.

(Image source: Finology Ticker)

It is correlated with the price too.

The company gave 15.8% CAGR returns in the past 5 years.

Going forward, some of its Strengths are

• Market Leader: ITC boasts dominant market positions in cigarettes (Gold Flake, Classic), branded atta (Aashirvaad), biscuits (Sunfeast), snacks (Bingo!), and stationery (Classmate). This diverse portfolio provides stability and resilience during economic downturns.

• Integrated Model: The company’s leadership in paperboards, paper, and packaging supports its FMCG ventures, creating a strong operational synergy.

• Defensive Stock: As evident from the provided chart, ITC’s stock price has exhibited relatively stable growth, even during the 2020 market crash. This stability makes it an attractive option for investors seeking defensive plays in the FMCG sector.

• Brand Power: ITC’s extensive brand portfolio, including household names like Aashirvaad and Sunfeast, fosters strong brand loyalty and consistent revenue streams.

• Index Inclusion: The company’s presence in 39 indices signifies its significant market impact and potential for passive investment exposure.

Recent Performance:

While ITC’s Q1FY25 results showed a slight dip in net profit, its total income experienced marginal growth. It’s crucial to monitor future quarters to assess the sustainability of this trend.

Investment Thesis:

ITC presents itself as a compelling investment opportunity due to Stable growth, Diversification, Brand Power & potential for growth.

However, some factors require consideration:

• Slowdown in Cigarette Sales: The rising awareness of health concerns might lead to a gradual decline in cigarette sales, impacting a significant portion of ITC’s revenue.

• Regulatory Risks: The government’s policies regarding tobacco and FMCG products can affect ITC’s profitability.

Overall, ITC remains a solid long-term investment option for those seeking stability and potential for moderate growth. However, conducting further research and staying updated on the company’s performance and industry trends is crucial before making any investment decisions.

Let’s discuss!

• What are your thoughts on ITC’s future prospects?
• Are there any other factors we should consider before investing in ITC?
• How does ITC compare to other FMCG giants in India?