Finance

Investing in ITC: A Guide for Shareholders and Potential Investors

ITC Limited is one of India’s most diversified and admired business corporations, with a wide range of businesses spanning FMCG, Hotels, Paperboards and Packaging, Agri Business, and IT1. The company has a market capitalization of nearly US 35 billion and a Gross Sales Value of US 10.8 billion as of March 20232. It is also a global epitome in sustainability, being the only company to be carbon-positive, water-positive, and solid waste recycling-positive for over a decade3.

If you are a shareholder or considering investing in ITC, you might be interested in the financial performance, dividend policy, ITC share price history, growth prospects, and competitive advantages. Today, we will provide helpful information and tips on investing in ITC.

Financial Performance

ITC has delivered a consistent and robust financial performance even after the challenges the pandemic posed, the slowdown in the economy, and the regulatory changes in the tobacco industry. The company reported a 10.3% year-on-year increase in its net profit to ₹4,927 crore for the quarter ended September 2023, beating the analysts’ estimates4. Its revenue from operations grew by 13.6% to ₹15,404 crore, driven by a strong recovery in its FMCG, hotels, and agri-business segments. Its earnings per share (EPS) stood at ₹4.02, up from ₹3.64 in the same quarter last year5.

Dividend Policy

ITC’s generous dividend policy reflects its commitment to reward its shareholders and retain its earnings for future growth. The company has decided to offer 80-85 % of its profit after tax (PAT) as dividends to its shareholders, effective from the financial year 2019-20. It would be applicable in the medium term6.

The company announced a final dividend of ₹6.75 per share, with a special dividend of ₹2.75 per share for the financial year 2023, taking the total dividend payout for FY23 to ₹15.50 per equity share7. The current stock price of ₹449.75 translates into a dividend of 3.45%, which is higher than the average dividend yield of the Nifty 50 index8.

Share Price History

ITC share price has been volatile in the past year, ranging from a 52-week low of ₹323.36 to a 52-week high of ₹499.79. However, the stock has recovered recently, as the company reported unexpected results. The stock has a PE of 28.32, lower than its historical average and peers 10.

Growth Prospects

ITC has a strong growth potential, leveraging its institutional strengths, diversified portfolio, innovation capabilities, and rural linkages to create value for its stakeholders. The company has a vibrant portfolio of 25+ world-class FMCG brands, which cater to the growing aspirations and needs of Indian consumers. The company is also investing in new categories, such as health and wellness, dairy, beverages, personal care, and hygiene, to capture the emerging opportunities.

The company’s hotel business is expected to benefit from the revival in domestic travel and tourism and its differentiated offerings in the ‘Responsible Luxury’ segment. Its paperboards and packaging business is well-positioned to tap the demand for sustainable and value-added products, especially in the e-commerce, food, and pharma sectors.

ITC’s agribusiness is a globally acknowledged pioneer in farmer empowerment, providing a competitive edge to its FMCG products. The company’s IT subsidiary, ITC Infotech, is a specialized global digital solutions provider and serves clients across various industries and geographies.

Competitive Advantages

ITC has several competitive advantages that enable it to sustain its leadership position and create long-term value. Some of these are:

  • Diversified and resilient business model, reducing the risk of dependence on any single segment or market
  • Deep consumer insight, helping in developing differentiated and superior products and services
  • Cutting-edge research and development, which fosters innovation and quality excellence
  • Brand-building capability, enhancing the equity and loyalty of its products and services
  • World-class manufacturing infrastructure, ensuring operational efficiency and cost competitiveness
  • Extensive rural linkage, providing a source of raw materials, a distribution network, and a social impact
  • Efficient trade marketing and distribution network, reaching millions of outlets across the country
  • Dedicated human resources, driving the culture of performance and values
  • ‘Nation First’ philosophy, underlining its commitment to creating more considerable societal value and addressing the national priorities

ITC is a leading and respected Indian company. It has a solid financial history, a culture of innovation, and a commitment to sustainability. It has a diverse and flexible business model, which helps it grow in India and abroad. Its unique strengths make it stand out from its competitors and create value for its shareholders and stakeholders.

ITC can be a good choice for long-term investors who want a steady and reliable return and a positive social impact. Investors should also research, analyze, and talk to a professional share market advisor before investing.

References:

  1. About ITC Limited – one of India’s foremost private sector companies
  2. ITC Ltd (ITC) Stock Price & News – Google Finance
  3. ITC Ltd has a diversified presence in FMCG, Hotels, Paperboards …
  4. ITC Declares 10.3% YoY Surge In Q2 Profit At Rs 4927 Crore
  5. ITC Limited (ITC.NS) Stock Historical Prices & Data – Yahoo Finance
  6. ITC Dividend Analysis: Should you buy ITC for its dividend payouts?
  7. ITC Dividend: ITC announces Rs 9.50 per share dividend; sets May 30 as …
  8. ITC | Dividends > Diversified > Dividends declared by ITC – Moneycontrol
  9. ITC Ltd (ITC) Historical Prices – Investing.com India
  10. ITC – History and Evolution

Related Articles