No idea.
I guess AGM remains the only source to know about the happenings.
My best guess would be, they won’t be too sure to answer about questions regarding Cigarette industry/ it’s lobbying etc etc.
As far as I remember, Reliance too doesn’t host Concalls.
Results announced for Q4FY0.
Dividend Update
The Board at the meeting held on 26th June, 2020 recommended dividend of Rs 10.15 per Ordinary Share of Re 1/- each
That’s a dividend yield of nearly 5% at current stock price.
Results Summary
| Q4FY20 | Q4FY19 | %Change (YoY) | |
|---|---|---|---|
| Profit (Cr) | 3797 | 3481.9 |  6.5 |
| Revenue (Cr) | 11420 | 12206 |  6.4 |
| EBITDA (Cr) | 4163.5 | 4571.6 | 8.9 |
| Margin (%) | 38.4% | 38.1% | 30bps |
Segment-wise change (YoY) (Q4FY20 vs Q4FY19)
| | Gross Revenue | Profit Before Tax
—|—|----|----
FMCG - Cigarettes| -6.5% |-11.8%
FMCG - Others | -2.8% | +12.6%
Hotels|-8.6%| -52.0%
Agri Business|-10.2%|-16.4%
Paperboards, Paper & Packaging|-5.1%|-4.9%
Notes:
At first glance the results look unbelievably good today. Will delve a bit deeper later. Overall I think it’s beaten street estimates. I literally bought a truckload of itc when it fell to 150 in March with the logic that they were increasing dividend yield, stopping capex and FMCG/agro had begun contributing enough to take some of the responsibility away from cigarettes and I’m glad to see all of this logic represented in the results. What a way to start this decade for itc. Can see only better things ahead for it over the next 10 years .
Result announced & recommended dividend of Rs. 10.15 per
Solid results. Have mixed feelings about the large div declared. Had this been last year, it would have been a no brainer. But given the new taxation of div and most importantly the fire sale in the markets where you have ITC in a unique position holding a mountain of cash, could there have been a better use of 12,000+ cr this year?
These companies are not for sale but at the right price / timing a deal could happen?
FMCG: Emami, Zydus, Galaxy Surf, Bajaj Consumer, KRBL
Hotels: Oberoi Hotels (ITC existing shareholder)
Tobacco: Godfrey, VST
Random: Westlife (McDonalds), Rallis, Avanti, IndiaMart, Phoenix Mills
disc. Invested
ITC having Strongest Balance Sheet:
Cash & Cash Equivalent 561.84 cr. Vs. 162.71 Cr.
Bank Balance 6281.43 Cr. Vs. 3606.02 Cr.
₹10.15 Dividend.
Courtesy Twitter…
much awaited takeaway and walking the talk
FMCG Q4 margins are closer to 5%, annualized at 3.5%, last few Qtrs this has been inching up - guess this will be the trigger towards re-rating possibilities
Large portions of profit paid out in dividends @ 5% yield - promise delivered
ITC stays one of the best cash generator and resilient performer in Nifty in these tough times - available at 15 PE
Happily invested!!
ITC - comments of Cigarette performance and Industry as a whole -->
A punitive and discriminatory taxation and regulatory regime along with a sharp increase in illegal trade in recent years, especially at the premium end, continue to pose significant challenges to the legal cigarette industry in the country.
Towards the end of the year, the COVID-19 pandemic caused operational disturbances even before the nation-wide lockdown. During the initial phase of the lockdown, unprecedented disruption was witnessed across the value chain. However, all factories are currently operational and sales & distribution operations are progressively normalising.
Immediately upon receipt of permissions, the Company was able to resume operations and swiftly ramp up production and availability of its brands across markets. This is a testimony to
the extraordinary resilience and deep commitment of the Company’s workforce and business partners.
Several new variants were introduced during the year to cater to the continuously evolving consumer preference and ensure the future readiness of the Company’s product portfolio. Key market interventions during the year include the launch of innovative and differentiated offerings at the premium end such as Gold Flake Indie Mint & Gold Flake Luxury and the extension of Gold Flake Neo & Classic Rich & Smooth to other markets. The Business also deployed focused offers under the ‘American Club’, ‘Wave’, ‘Player’s Gold Leaf’, ‘Pall Mall’, ‘Navy Cut’, and ‘Flake’ trademarks in strategic markets towards bolstering and strengthening its market standing.
It is pertinent to note that since 2016-17 i.e. pre-GST, taxes on cigarettes have increased by 40%, i.e. at a compound annual growth rate (CAGR) of about 12% (on a comparable basis) - over thrice the rate of inflation during the same period.
Discriminatory taxation on cigarettes, has caused progressive migration from consumption of duty- paid cigarettes to other lightly taxed/tax-evaded forms of tobacco products, comprising illegal cigarettes and bidi, chewing tobacco, Gurkha, Zarda, snuff, etc. Consequently, while the share of legal cigarettes in total tobacco consumption in the country has declined considerably from 21% in 1981- 82 to a mere 9% (against global average of 90%), aggregate tobacco consumption has increased over the same period.
Illicit cigarette trade in the country has been growing at an alarming rate. Euromonitor International ranks India as the 4th largest illicit cigarette market globally.
While legal cigarette industry volumes have declined by about 20% between 2010/11 and 2019/ 20, the illicit duty-evaded cigarette segment has grown by 36% during the same period , accounting for about one-fourth of the domestic industry and making India one of the fastest growing illicit cigarette markets in the world.
The regulatory framework for cigarettes in the country is one of the strictest in the world.
The large and rapidly growing illicit cigarette trade also has a deleterious impact on the millions of farmers and farm workers engaged in the tobacco value chain. Since smuggled international brands of cigarettes do not use Indian tobaccos, in addition to revenue losses, the growth of the illegal cigarette trade has also resulted in a severe drop in demand for Indian FCV tobaccos in the domestic market.
It is pertinent to note that several other major tobacco producing countries, including the USA have framed regulatory frameworks for tobacco taking into consideration the economic interests of their tobacco farmers. The inadvertent and unforeseen consequence of the stringent Indian tobacco regulations and discriminatory taxation continues to adversely impact the livelihood of Indian tobacco farmers with corresponding gains to tobacco farmers in the countries that have opted for moderate and equitable tobacco regulations.
It is estimated that since 2013-14, Indian tobacco farmers have suffered a cumulative drop in earnings of appx. Rs.5,175 crore
Stability in taxes on cigarettes will have the salutary effect of enabling the legal cigarette industry to claw back volumes thereby engendering domestic demand for Indian tobaccos. This will also help cushion the impact of volatility in international markets.
So, they are trying to play the farmer card for stability in rules and laws in the industry.
According to them, the illicit cigarette segment GREW 36% in the past decade, so if they were to tap into this market, cigarette volumes would grow handsomely.
Hi,
A per my understanding I will agree that instead of sharing 80-85% of profits in terms of dividend,some amount of that part of money should be used to reinvest in business or even inorganic expansion by acquiring good brands(like they acquired sunrise spices).
They should try to go into the premium food category market(similar to Nestle’s product).Currently most of their products have low margins.But as of now I am happy for the hefty dividend.
Disc:invested
Thanks,
Deb
My take on this is, they are already growing their FCFs at a good rate, so dividend increase is also required to reward the shareholders, especially, since their “cash-cow” is the main reason why they have been derated.
They had an intense capex planned over the last 5-6 years, which is over now (including ICML facilities for FMCG), it makes sense wait and watch the fruits of those capex.
Regarding reinvestment into the business, growth in ITC’s FMCG segment (or any other non-cigarette segment) is not hampered merely by increasing dividend payout. They have a lot of cash on their books. It would take a long time when they have to trade dividend with growth.
But since ITC’s cig business is going nowhere is the near future, I consider it very good that they are thinking about us shareholders too.
With its huge capex over and with the amount of free cash flows they have currently I don’t see why giving out a huge dividend is an issue. Right now they are a potentially high growth stock due to their potential in FMCG who can give out high dividends due to their excess cash from cigarettes. Everything they are doing makes sense. Where else can you get a potentially high growth and FD beating dividend paying stock 
( maybe just sonata and rites (albeit a psu) belong to this category of growth + dividend stock). I don’t see any issue at all with the payout
I completely agree. Find increasingly no value addition. Some members seeking whether they can get segment wise information and other good member providing support by way of providing link to BSE website. I know various people have different background and different understanding level. But seeking information like segmentwise (which is basically even available on BSE website), just wondering where we are going?
This way members would continue seeking information and others providing revert on same resulting large number of message without any insight. We all are excited when we are invested in company. But controlling behaviour is most criticial (and also most ignored virtue by the most investors) virtue of successful investor in my opinion. First we find discussion, on morality and sin, then management past conduct, then new product launch link, then sevlon related discussion, than connecting link to other website (with oneliner that good insights) and and then management conference call in addition to various friends want to contribute to thread by oneliners.
As a initiator of thread, I get daily 10 emails since last couple of day and initially tried to control the thread, but increasingly find I am lossing out. Please note that I do not want to blame any individual/member. However, just request all members to read their post and decide what value addition there oneliner make to readers. If they find in their opinion, there post are not adding “material” value, I would suggest them to delete same. I would like to leave it to members themselves to clean up the thread.
My apology to every one whom I may have hurt by posting this thread, but I thought I need to write this message to maintain the sanity of threads.
Wish every one happy investing !!!
@dd1474 Hi. I am a long time reader on this website but have just recently started actively commenting on discussions. I am not aware that posting a summary of results especially at year-end is something which doesn’t add value to the discussions. As a long time reader on the forum, I often see this happening on many threads which usually initiates/help further discussion on that particular stock. The numbers which I had posted were % increase/decrease in various numbers of the result which can’t immediately/easily referred from the results. I found it useful to be shared for better readability of the results. I in-fact have more charts ready in my excel sheet which I wanted to share, but I think I’ll have to give it a pass now.
For now, I’ll delete my comment. Apologies for not knowing the strict dos and dont’s of about posting on stock threads. Cheers.
(Edit: It seems the mods/admins have reverted the delete. Will delete this comment later.)
ITC does not do concalls but every quarter after the results, they come up with a press release which goes in detail of all the individual businesses. Request everyone to read them to understand more about the company. It is available in BSE/NSE announcements section. This is for the recent quarter - https://www.bseindia.com/xml-data/corpfiling/AttachLive/ae1d4ecd-f0e5-497c-801e-3cc3914ded59.pdf
I think the change in their dividend policy as some of us rightly pointed out is that major part of their capex like the integrated factories etc are done. Also this year’s DDT changes where companies need not have to pay tax on dividend but taxed at the hands of the shareholders, would have played a role in the change in policy. I think this is a welcome change and will force the management to effectively allocate capital. This will also attract long-term oriented shareholders who are looking at the dividend yield.
ITC LTD:-
How you can recover your investment in 10 years through dividend by investing in ITC Ltd.
ITC is reducing dependence from Cigarettes business.
ITC used to had 62% business from cigarettes business which have now reduced to 46.60%, but EBIT margin has increased in Cigarettes business from 36% to 66.89%.
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Good point here. This is infact very easily achievable as ITC has had an average PAT CAGR of >10% in any time frame.
According to me
All marie biscuits taste the same
All attas are similar
I find the taste of preserved juice from all brands to be good
I like maggie as well as yipeee
Navneet and Classmates notebooks feel the same while writing
Once you surpass the quality threshold all FMCG products are similar but its the companies job to alter the psychology of consumer so that consumer feels good and content when using their products.
This is done using spending a lot on brand building and ads.
So in the long run company with cheap cash will win the game which ITC has in ample amount.
I do not think that is true. In fact I do not like ITC’s FMCG segment for the same reason that you have mentioned. Maggi, Marie biscuits, hide and seek have been able to create a brand that differentiates it. ITC has been utterly usless with that. They have been doing what you said is there advantage (throwing free cash on these segments) but for one reason or another, they have not been able to create a cult brand for any of their FMCG products (except for Ashirvad maybe).
Customers’ preferences for what they eat is very strong. This is why Buffett gives the example of Coke and Wrigley’s, he says that a customer who prefers to eat these will go to another shop if the shop they are at do not carry these brands. Sunfeast and Yippee seem like generic private label brands compared to Marie and Maggie and most consumers will not just shift to any FMCG product until they are entirely convinced.
So far ITC has just been rolling out sub-par FMCG products that cannot compare to the leaders.
