Not just that but real competition is from illegal vape or electronic cigarrete. Few of my ‘non-smoker’ friends are regular users now. Highly addictive, easy to use and available despite curbs.
Disc: I don’t smoke and no position
5 Likes
While the results of ITC where out today, the below is what my news feed looked like,
So like any sane person would do, I went into their financials and looked at what went wrong
The company had booked a sales gain of 15k crores which boasted their previous year (FY25) earnings, meanwhile, the normal course of the business is inline with the previous years with considerable growth in the topline as well as the profit level.
With more liquidity and volatility in the market, it becomes really pruden to see how these kind of news essentially plays out!
Disc: Non-smoker today and no position but tracking
15 Likes
ITC Infotech has been the neglected child of the conglomerate for years. It does not even get a place in the presentation. surprisingly, Amalgamation of blazeclan and Happiest minds is good news.
I, as an investor am not happy with Sanjiv Puri. The recent outperformance of the company was purely thanks to macro and sectoral tailwinds.
the packaging and printing business was started in 1925
the hotels business was started in 1975
the paperboards business was started in 1979
Agri business was started in 1990
ITC infotech was started in 2000
ITC FMCG- Others was started in 2001
(the dates have been pulled by Gemini)
so, the behemoth has not seen a single new entry since 2001. Their foray into wills lifestyle failed. Their foray into E-marketplace failed. Their foray into Hospitals never materialized (some doctores employed by ITC still show the position on linkedin). There is not update on their foray into healthcare products.
Does the Conglomerate have a direction in which it intends to go? Does it really want ITC Infotech to grow? The tax hike on tobacco has hurt it badly and I do not expect changes in a few quarters.
2 Likes
It looks like ITC infotech, unlike hotels, will not demerge & rather be listed via happiest minds….to be honest I had hoped for a demerger like hotels business being existing shareholder of ITC. Other than the business benefit of merging with happiest minds, I do not see any major value unlocking for ITC existing shareholder as anyhow standalone midcap IT firms trade around 20PE and ITC is around 18 PE. Plus there will be holding discount on listing…..demerger of cash flow rich IT business would have been better for existing shareholders…
Above just my thought & I can be wrong in all my assessments. What do other long term ITC shareholders think on this merger and way of listing of infotech business?
2 Likes
I was surprised to see last 10 years revenue and profits cagr of itc infotech was top notch and at top quadrant among midcap IT firms. Margins were also near average (obviously lesser than engineering IT firms)….so its already growing decent. I took data from google gemini to compare. Add to it the acquisition is at a great time when valuations of IT firms are compressed and happiest minds is AI focussed firm and complimentary, so I would say capital allocation is also excellent.
They seem to be doing some right issue of ITC infotech to fund the deal…
My only thought is around what would have been most beneficial way for existing shareholders of ITC for ITC infotech to list….would a demerger and getting shares of ITC infotech had been an expected and better route? Not sure
6 Likes