Friday, 17 May 2013

Incredible Stocks - ITC Ltd

ITC Ltd is a well known company operating in diversified segments. This company which was known as only a cigarette manufacturer about 15yrs back has now become a trusted brand in households in the FMCG segments with its varied product offerings. In the period from 1996 to 2012 its non-cigarette segment revenue increased from Rs.1363cr to Rs. 16150cr. This clearly shows ITC’s competitive position in various business verticals.

ITC has varied business segments which include FMCG, hotels, Agri-products, Paperboard & speciality paper and packaging. The diversified FMCG segment includes products like the well known Aashirvaad, Sunfeast, Yippee, Bingo! etc. It manufactures various personal care products, agarbathis, stationery and lifestyle products situating itself as a competitive player in this sector. 

Following are the financials for a quick view:

Sales (in Cr)299012475821168181531561219.3
Profit (in Cr)7148616249884061326422.78
EBIT Margin%32.8736.1934.6633.4931.03

CMP when posted was Rs. 334.70.

According to the last  9 months report,  the company has shown sales growth of 18.86% YoY and profit has grown 20.7% YoY.

According to latest report the non-cigarette FMCG segment has recorded maiden profit in Q4 FY 2012-13.  The Q4 net profit rose 19% YoY. For the full year PAT is 20.4%. Net revenues grew by 19.4%. For the full year other FMCG business loss has narrowed to Rs. 81cr from Rs. 195cr.

The company can reach its valuation at some point of time by virtue of its consumer business but from the long term perspective the company can create still wealth for its investors.

ITC can be taken as the proof of India’s consumption story. In the last decade, ITC’s sales and profit have grown 5 times. It has created shareholder wealth at 25% CAGR during the period 1996-2012. In the long term perspective, the company has created wealth consistently and since the India story is still continuing ITC is a good long term stock.