ITC Share Price: 6 Reasons to Invest in ITC
ITC has a strong presence in the Indian market
ITC is the fifth largest FMCG (fast-moving consumer goods) company in the Indian market. It has a strong presence across three key segments – cigarettes (88% of sales), beverages and (17% of sales), food and agribusiness (14% of sales).
ITC has a strong dividend payout history ITC pays an annual dividend of ₹6.5 per share and this dividend has been increased for 13 consecutive years since its IPO.
The latest dividend announcement was made in April 2018. ITC dividend yield: 5.0% As the dividends paid by ITC are guaranteed, it is a safe investment as the investor will receive a dividend every year in exchange for holding the stock.
ITCs stock is currently at its lowest
ITC’s stock has tanked following the Goods and Services Tax (GST). GST is being implemented across the nation and will affect trade and industry. In anticipation of this, companies across the board are facing massive problems, some more than others. ITC’s current business model is being badly hurt and its valuation is almost half of its 2011 peak. Nevertheless, the outlook for the stock remains positive and I expect it to rally in the long run.
For one, the stock is currently trading at a forward P/E of 14.8 which is below the long-term average P/E of 15.4. This is more reasonable considering the profitability of the company. Its price-to-book ratio of 1.1 also compares favorably with the average of 1.5 for the Indian stock market and is better than most of its peers in the industry.
ITC has an international presence in several countries
It is one of the major players in the FMCG market and is one of the top cigarette manufacturers in India. ITC has a presence in the hotels, logistics, and airlines industries It also provides logistics services to airlines across the world. It has one of the largest FMCG pipelines in the country. Source: Internal MRP, ITC Powered by Capital Market – Live News (This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.
ITC is the largest cigarette company in India
The ITC cigarette empire holds the numero uno position in India in terms of production and retail. ITC’s cigarette sales of Rs.99.30 billion for FY 2016-17 were 70% higher than the previous year. The company holds a 22% share of the total cigarette sales in the country. It has also aggressively entered the fast-moving consumer goods (FMCG) segment of the Indian economy.
ITC’s FMCG division recorded sales worth Rs.64.6 billion for FY 2016-17, registering a year-on-year growth of 30%. It also owns brands such as Godfrey Phillips, SL, Harpic, Holiday Inn, and Himalaya. The company’s hotels portfolio includes brands such as Holiday Inn Express, Chedi, Evershine, ITC Premier Inn, and ITC Grand Bharat.
ITC has diversified FMCG products
ITC has become a large FMCG company in India. With brands like Lynx, Saffola, Harpic and hundreds of others, the company offers a wide variety of household, health care and personal care products to its customers. ITC has an FMCG division that sells almost all its products under the Rs 100-250 category.
This division holds over 70% of the company’s profits and is the most profitable FMCG division of all the FMCG companies in India.
This is due to the fact that even when compared to the overall growth of the Indian FMCG industry, which is among the highest, the earnings of this division have consistently grown much faster than the overall FMCG industry growth. ITC owns or owns a 51 percent stake in the Sunfeast brand.
With the largest tobacco crop in India, ITCs revenue should remain steady
ITC currently has an equity market capitalization of Rs. 1,71,620 crores and a revenue market capitalization of Rs. 4,01,839 crores (as of 31st March 2016). ITC is one of the largest companies in the Indian market and the fifth-largest in Asia.
ITC holds a dominant market share of 28.0% in the Indian cigarette market, which is equivalent to 53.2% of the total cigarettes sold in India. The company sells approximately 55,000 tonnes of cigarettes in India annually and has strong brand equity.
To read more about ITC Limited, click here. 3. Marlboro Although the two cigarette giants of the United States – Philip Morris International and Altria – have divested from their tobacco interests in various parts of the world, Marlboro remains a significant piece of their portfolio.