ITC: "Will"(s) "Gold Flake" assist "Ashirwad" to win "Bingo!"?

Agree with your views. Personally I believe, IT & FMCG - both have multiple avenues to grow inorganically and is in line with the industry practices, post acquisitions it takes somewhere around 18 to 24 months to see the benefits.

On the other hand, FMCG has strong base now to continue to grow organically as well over next three to five years. I feel positive on this front.

FYI- Excerpts from HSIE (HDFC Sec Institutional Research ) Results -04 Feb:
"FMCG registered 11% two-year CAGR vs. Emami’s 9%, Dabur’s
13%, HUL’s 11%, Marico’s 15% and Colgate’s 6%. FMCG EBITDA margin
was at 9.1% (-50bps YoY) despite commodity headwinds"

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Any data which shows actual volume growth…

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600 gms of plant based protein can cost USD 22, and in India I guess we do not have any competition for this, this will definitely be a better substitute for Vegans , and should contribute to the bottom line


I see a lot of helpful content here but very little on the demerger plans which are underway. We’re looking at creation of:

  1. ITC Infotech
  2. ITC Hotels (which just turned profitable)
  3. ITC (everything else in the kitty)

I’d request someone to focus on this VERY REAL possibility which will shape up over the next 2-3 years. Share with novice investors the creation of value basis your analysis & understanding. How many stocks will an individual end up getting of each of the two new entities mentioned above? Let’s get real please. Does anyone have any info on that? Please share it, thanks.

(FMCG will not be demerged till the time it becomes self-sustaining. We’re competing against global FMCG giants and regularly beating them. Be patient.)


They have made their intention clear that Infotech will go for an IPO and not demerger. So, it will add to the cash balances of ITC (higher dividend?).


ITC has been at the forefront on ESG activities and initiatives.

Let’s hope ITC catches up with Dabur on this front soon.


Rise in Commodities prices and Inflation favours FMCG stocks that are backward integrated and have hard assets

Normally Most FMCG work on asset light model by leasing offices/ Warehouses , open ended HRAs for employees and near term RM positioning ( typically 1- 4 months ) …

ITC is unique because of Agri commodities - stocks 1 to 2 years Wheat stock sometime around even as high as 2 million tons + of high quality wheat ( to account for seasonal crop & quality failures ) . This is context that Indian GOVT stores typically 25 to 30 million tons of Avg quality wheat … The same is for tobacco and other critical commodities … ITC owns critical warehouses , office HQ & many branches and employee housing .

While in non inflationary environment the above may seem bad capital allocation , but when inflation rises like it has in last few years … these depreciated assets ( land , warehouses and offices ) offer huge cost advantages … This is like front end brand investment that companies do …

Lets see how ITC leverages these asset in commodities , paper and food processing

ITC inspite of dividends is now outperforming HUL


How itc can gain with comodity is now also been seen by many economic news.


Takeaways for me from the second article

  • Today, cigarettes account for less than 50 per cent of ITC revenues, which is also easing ESG concerns.
  • Analysts are also positive about ITC sharing its technology business details in the past few quarters, rising transparency across the businesses.
  • Opportunities in the agri-segment arising out of the Russia-Ukraine conflict is another positive. ITC shipped out about 2 million tonnes of wheat and wheat products in FY22.

This investment in blupin complements ITCs investment in Mother Sparsh.


I had Bata Shares some years back, and they used to give discount coupons every year.
Why cant ITC with its Huge share holders base can issue discount coupons on its Hotels which have been bleeding for some time.
Perhaps some boarders who have been tracking could explain


Yes have listened many times that this happened with Indian hotels also.
Yes they can do it maybe the base is to large as if we think of itc the number of pan that hold there share is huge just see news 1.5lac retail exit from itc that is massive.
Also hotel is not there core business but as a holder will love to get coupons for hotel or FMCG.
This may be due to its overall size as itc is a megacap type company with very low share price so the cupon number would be to huge.
Also it may also not be that good for them.


@Vego / @Contrabets - Nice ideas… I think the better solution would be to provide shareholder coupn on their They would be able to attract traffic.

Relaxo does provide its discount coupons, had been using for last two yrs now. It works both offline & online.
Titan also does it. I remember receiving it last to last year, haven’t seen mail this year. Their shareholder coupon also works both offline & online.

As a shareholder it gives me more confidence to use the company products & I think, at some level it would work as Governance too (more like psychological impact, than anything else).

Disc : Invested in above given names from last couple of years.


As a customer and as a shareholder I am a little bit disappointed to see that itc being such a giant still doesn’t serve many areas.
I personally live in Jaipur which is a tier 1 city and even in many other cities also even after launching it quite a while ago if we take online business expansion as a scale.


I feel, this quarter is going to be excellent on all parameters. All businesses have improved and are enjoying tailwinds. Have seen many reports in the past month along with 1.5 L retail investors moving out from ITC and increase in FII holding in last qrtr supports the narrative of consolidation getting over.

  • Cigarette - Volumes have exceeded pre covid levels, Good traction in export of tobacco is also expected to aid in top & bottom line.
  • FMCG - Online coverage increasing will help in improving margin and reachability. Input costs can hamper somewhat but not much as most of the raw materials are sourced internally.
  • Agri - Going to be big this qrtr due to increased exports in agri products and global events.
  • Paper & packaging - Paper industry/sector is in tailwind and the entire sector is gaining so it should benefit ITC as well.
  • Hotel - Travel has picked up and the profits will soar from this qrtr and going forward.
  • ITC Infotech - Could be moderate given the attrition and margin trend of the sector.

Disc:- Invested and Biased, Pls do your own Due Diligence.


One area that ITC can be do very well but it has not yet came to limelight: Spices

We all know ITC paid about 2100 Cr to takeover Sunrise brands which mainly caters to eastern India. I was a little disappointed with packaging and lack of marketing efforts.

Introduction to Indian Spice Market:

Not surprisingly Indian spice market is one of the biggest in the world. Currently valued at a market size of 65,000 Cr. It was projected that market size will reach 1 Lakh Crore by the year 2025. But this market size is very fragmented and dominated by the regional players. Out of this only 24 % belong to organised sector and rest are smaller regional players. But organised sector has been capturing markets pretty fast after double blow of DeMO, GST and recently covid related stress. Due to this organised sector is set to capture 50 % market size by 2025 thats is almost 50,000 Cr.

Why this market is attractive

This is a high margin business. Ordinaly simple spice has about 30-35 % gross margins while blended spice ( like biriyani masala for example ) has 45-50 % gross margins. Simply by mixing few in correct ratios margins are improved by 20 %.

Who are the dominant players

Only a handful of players dominate organised sectors but only few have true pan Indian presence.

Everest 15 %
MDH 10 %
Sakthi 8 %
Aachi 6 %
Eastern 4 %

Only Everest and MDH had pan india presence and others are trying to expand. Recently MTR took over Eastern. There were articles saying HUL is interested in taking over MDH. I feel ITC can get some market share if they play it well.

To my surprise ( probably I didnt read AR fully last year ), ITC is building a new state-of-the-art spices facility to cater the domestic and international markets. Export markets are pretty attractive as more and more Indian families are living abroad and world is also interested in eating different cuisine.

This was mentioned in 2021 Annual Report its built in Guntur. I did some small search to see the status of this.

On Jan 2021

On Mar 2022

This is the proposed facility

As with ITC philosophy this will be a fully backwards integrated facility with storage capacity. Looks like the facility is close to commissioning. I hope they will do enough marketing, good attractive packaging to gain customers.


Great insights. This is something which is not being talked about much after their acquisition. Thank you for these good research. Given you have tried their spices, how do they augur well? Are they getting the priority shelf presence? I believe they are still dominated by MDH and Everest.

I think one marketing and promotion that they could think about is to promote it with their other fmcg products. Like with Aashirwad atta for e.g. Traction, attraction and awareness has to be created.


SunRise spices is number 1 in West Bengal. ITC is trying to expand them to eastern India as well as Odhisa and Bihar.

A one brand pan Indian spices wont work. Thats the important key to understand. India has many many submarkets, so only a micro market strategy as well as price rationalisation alone will work.

Peoples taste differ state to state and we have wide variety of cuisines among India. Any company that appreciates this will succeed in spice market otherwise they are bound to fail. For example Sambar in Tamilnadu tastes different than Sambar in Karnataka. They simply cant sell same sambar powder even among south Indian states. So instead of going pan india one brand one product, they must have different brands/varieties depending on regions. This is also why regional players dominate the market.

This problem is not new to ITC and thats also why im counting on them to succeed. They have executing this very well for quite sometime. Let me explain that with cigarette example

Classic and Gold flake are mother brands. But they developed custom brands based on micro market requirements.

Brands Regions
Navy Cut Kerala & Norh East
Bristol West
Capston North
Flake East
American Club Telangana & Andhra
Silk Cut Bengal
Scissors Tamilnadu
Pleyers Karnataka

These brands were developed using local insights and local opportunities. Unlike other sectors food has to to be identified with locals otherwise people will reject it. Regional customisation is the big key here but I trust ITC more than anyone else on that.

My sister liked some but it wasnt widely available back then. But I think supply will come only after the factory is fully functional.

its been a while, but I will checkout during my next trip.


Nicely expressed views and data. I see Tata sampann not in list. Is it insignificant now and also you do see low potential that it’s excluded from such an exhaustive write up?

Excellent point! One aspect worth considering - spices have 2 aspects broadly…standalone/raw spices like say just a turmeric powder, coriander powder etc. And such mixes like sambhar masala…do you have any data on how much the standalone spices contribute today to the overall pie and the growth trajectory of the each pie in the mix?
With movement of unorganized to organized, i see significant traction in raw spices also…and see Tata sampann as formidable player here as well…any data points would be helpful.
Also, this segment can be played pan India, unlike as you rightly mentioned the mixed which need to have regional flavours…

Disc. Invested in both Tata consumer and ITC hence biased. Not a buy/sell recommendation.