Should you buy ITC LTD now ? Fundamental Analysis

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ITC Ltd products

Should you buy ITC LTD now ? – Fundamental Analysis

The Indian Multinational Group ITC Ltd was established in the year 1910, the company is a major manufacturer of Tobacco Products. Not only Tobacco manufacturing and Selling, but also the ITC Brands are wide in the different segments like Food Products, Personal Care, Paper Products, Pooja Products, Dairy & Agriculture based, Packaging Industry and Hotels.

It’s specific brands are Aashirvaad Atta, Wills, Gold Flake, Kings, Classmate Notebooks & Other Stationery, Mangaldeep, Sheraton, Fortune and Grand Chola Hotels, Snack items like Sun feast Biscuits, Candy man, Bingo and Yippee.

The current Chairman and Managing Director of the ITC Company is Mr. Sanjiv Puri and the company headquartered in Kolkata, India. ITC Ltd has reported its revenue of Rs. 52,000 Crore for the FY2018-19. It’s Net Profit was around Rs. 12,800 Crore in the said period.

The Company has a Total Assets of USD 10 Billion in the end of FY2019 and there are 27,279 employees working in ITC Ltd. Although the tobacco industry is primarily said to be, but the company has diversified its business in the various segments in the past few years. It is also being the dominant in the other industries.

ITC’s current Market Capitalization is around Rs. 2.91 Crore and the book value of the company stands at Rs. 47. The current share price is 5 times of the Book value. It is a Debt Free Company, which is a positive sign for the Investors.

In ITC Ltd, there are no promoters holding – so, no need to worry about the Pledging of Shares from the Promoters Side 🙂 On Behalf of Bodies Corporate and Insurance Companies, there are around 50 Percent Stake as a Public Holding. The Tobacco Manufacturers (India) Ltd holds 24 Percent, Specified Undertaking of the UTI had a 8 Percent, LIC India holds 16 Percent and other insurance companies hold around 1 Percent like ICICI Pru Life, GIC, The Oriental Insurance and The New India Assurance. 

Most of the Mutual Funds Schemes are holding this Ex-Multibagger Company, ITC Ltd. The Company’s Interest Coverage Ratio (ICR) stood at 460 Times. The Return on Equity has grown 27 Percent in the last 10 years. The Stock price has fallen nearly 15 Percent in the past one year. However the Sales Growth and Cash Flow is good at its time.

Sales Growth grew 7 Percent in the last 3 years, 6 Percent in 5 years and 11 Percent in the 10 year Period. The Profit Growth grew 11 Percent over the past 3 years, 8 Percent in 5 years and 14 Percent over Ten years. The Stock Price CAGR has returned 11 Percent over the past 10 years.

If an investor, bought 1000 shares of ITC in the year 2005, which the invested amount is Rs. 30,000 /- (Share Price of Rs. 30 X 1000 Shares). Now, it is worth about Rs. 1.08 Crore. These include with Stock Split (Face Value) and Bonus issue of Shares, but the dividend amounts are not taken into account.

For the Financial year 2008, the Company was earned a revenue of Rs. 14,633 Crore to Rs. 48,350 Crore in FY19. The Net Profit were also raised from Rs. 3,158 Crore in 2008 to Rs. 12,592 Crore in the end of Fiscal year 2019. Company’s Reserves stood at Rs. 57,259 Crore at the end of September Quarter 2019.

ITC Ltd Fair value

Generally most of the companies listed in the Stock Market will show the net profits in the Results card. But only if the stated profits arrives at Cash Flow, is the actual amount in account. If not, the company may face trouble in Debt at a later time. ITC’s profits are receiving as a Positive Cash Flow in the past years.

According to the DCF Valuation, the price of a share is worth around Rs. 180 Per Share. But the current market price is trading at little high. However for the Long term investing, one can analyze this stock and make a Decision.

Kindly share your views / comments with a smile 🙂

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