Why ITC is not demerging its business heads.they have several good profitable businesses like Cigarettes,Hotels,Papers,Agri & FMCG.in that way shareholders can atleast get the fair market price of each businesses.Boarders any idea why ITC is not doing that?
Other businesses needs growth capital to attain a level from where its profits/CF can take care of required growth capital.
So probably they won’t until that point
Hi, They have huge cash reserves.In my view they can allocate them to each business proportionally keeping growth potential and current profit in mind. Cigarettes business is the cash cow so that will be requiring less cash.
Thanks,
Deb
Heard that govt is planning a couple of things related to tobacco.
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Increasing age limit to 21 years for buying tobacco products from existing 18 years of age.
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Asking all companies to print barcode on all packets so that during inspection authorities can track whether it’s tax paid legal or not.
Read above points in local Telugu news paper.
ITC hit by the increase in the National Calamity Contingent Duty in this year’s Union Budget, had to raise prices of their offerings. This, analysts say, is helping illicit cigarette trade. ITC increased cigarette prices between 10 per cent and 20 per cent — the steepest hike by the firm in the past three years. Analysts say the hikes would result in a volume decline of 3-4 per cent
Coming up with new flavours was not exactly how cigarette firms thought they would be expanding their market share, but that is exactly what ITC and Godfrey Phillips India are doing.
Cigarette price hikes indicated a push on premiumisation, and macro weakness could be the stumbling block.
Src: Business Std
Hi fellow investors, this is just a simple discounted cash flow model for ITC. Assuming that the free cash flow will grow at 7% in the coming decade( Historically the free cash flow has grown at 11.49%) and applying 16% of margin of safety, the value of the stock comes at 196 which is CMP giving you an expected rate of return of 12% and dividend yield of 2.5%. What more can you expect from a large cap company ?
ITC is now trading at valuations similar to or lower than pure play tobacco companies, with a fraction of market share as compared to ITC. We all know about the fmcg side of the story, and how it pans out is anybody’s guess. But even for a pureplay tobacco company, the current valuations aren’t justified.
Regarding the street’s apprehension about sharp drop in volumes, being a smoker, I can safely say, this 1/1.5 rupees hike wouldn’t deter smokers much(Please remember the Cigarette prices have largely remained at the same levels since 2017-18). As far as illegal bootlegged cigarettes are concerned, agreed thais is a genuine concern, but don’t think it can ever capture more than 1% of market(ITC themselves do clampdowns, more efficiently than govt. on shops selling such cigarettes)
Hello Puneet,
Do you think smokers would be a bit worried about smuggled cigarettes due to the corona virus scare. Can this be a very short term positive for ITC.
Thanks
ITC has started snack kiosk at railway stations.
ITC Sunfeast Snack kiosk now operating at the second entry of Bangalore railway station.
ITC kiosk is the first Cafe kiosk in India and at any Indian Railway Station.
- Kiosk serves hygienic fresh food as per high standard of Quality Control check.
- ITC kiosk is serving each customer within an average of 3 minutes.
Though it is such a small segment, will hardly make a difference.
I believe ITC had targeted for Savlon topline of ~500 Cr. 4-5 years ago… Could not find the Savlon contribution in FY19 ITC annual report.
I saw it in one of the presentation …it’s around 100 to 120 cr. For FY19
It is still a new entrant with hardly 5 years of operations. It should touch 500cr by 2022-2023 going by usual 5 year targets most companies use. ( It is my opinion).
But the biggest issue with ITC has been that it’s products are not easily available. I see parle and Britannia biscuits filling up aisles in Dmart and star bazaar but Sunfeast has to be found. Same goes for its snacks and candies. Yippee is more accessible in comparison.
Also, ITC has biggest network nationally through its panwala network selling cigarettes. Still we never see ITC candies or packed snacks with them. Why? In Ahmedabad they all carry Balaji or lays. Why no ITC? Shouldn’t that be the first channel used for marketing and sales?
Exactly same experience with me I don’t fine any of their products except sunfeast ashirwad and bingo at any place even in Andheri West , Mumbai .
So I am sure same will be situation at many other places too .
I struggled to find B natural etc and now given up.
Now with stock at multi year low it’s high time that management wake up and actually do a reality check on this .
I visited Dmart in Pune yesterday, and guess what… dedicated space for Dark fantasy busicuits & ITC juice with offer one on one free. Also, in frozen food, I found variety of product. Packing is really attractive for all the available items. Hope this continues.
I was not exactly looking for ITC products. So, might have missed something.
In Valuepickr forum, oflate, we find lot of message of members visting various place and sharing their experience. While scuttle butt is importat, one also need to understand MATERIALITY and SAMPLE SIZE in mind. For a large companies like Hind Lever, ITC, Nestle, Britannia etc, which have nationwide presence through million of outlet and have at least 20 Cr household as regular customers, what is materiality of individual experience? On these forum, in last 10 days, there are at least 3-4 message which share there experience with various products. If we multiply members (at least 50000) with Products (at least 15 for HUL and ITC ) with monthly one visit, we would 50000X12X30 messages which would not add any value to anyone? Scuttlebutt is important but it has to be material. 10 observations from population of 20 Cr household, what is utility? FMCG companies use generally retail survery and their own data collected by field to analyse past and take business decision.
Request all members to use their insights and make this forum purposeful. My apology in advance if it hurt any members, but the point, we are taking a drop to analyse ocean which in my opinion not going to lead us anywhere.
In case you find any product launch news or new medium of delivery, that can be shared as it become important input to investment process. But just display in Kandivali thakur village D Mart/ Growel Big Bazar (I reside in Kandivali East, so nearest stores to me) would not any value in my opinion.
Disclosure: Have tracking position in both ITC/Hind Unilvever, View may be biased due to my investment, Not a SEBI registered advisor, Not A Recommendation
Hi,
Is it good ??Introduction of 50 new products in a financial year.I think that number of product doesnot matter but its acceptibility to the masses which matters.50 in a financial years seems to be too high.
Thanks,
Deb